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USD/TRY Targeting above 20.0000 | Q2 Q3Economists look for further sharp Turkish lira depreciation. They forecast the USD/TRY above the 20.00 level in the second quarter of the year. 𝐓𝐡𝐞 𝐧𝐢𝐠𝐡𝐭𝐦𝐚𝐫𝐞 𝐚𝐟𝐭𝐞𝐫 𝐂𝐡𝐫𝐢𝐬𝐭𝐦𝐚𝐬: “We think that USD/TRY will rise to 16.25 by end-Q1 and breach well over 20 in Q2. However, this is when we expect the CBRT to start tightening, which should help bring the pair down to around 19 by end-Q2.” “𝐓𝐡𝐞 𝐥𝐢𝐫𝐚 𝐜𝐚𝐧 𝐜𝐨𝐧𝐭𝐢𝐧𝐮𝐞 𝐚𝐩𝐩𝐫𝐞𝐜𝐢𝐚𝐭𝐢𝐧𝐠 𝐢𝐧 𝐚 𝐠𝐫𝐚𝐝𝐮𝐚𝐥 𝐦𝐚𝐧𝐧𝐞𝐫 𝐭𝐡𝐫𝐨𝐮𝐠𝐡𝐨𝐮𝐭 𝐭𝐡𝐞 𝐫𝐞𝐬𝐭 𝐨𝐟 𝟐𝟎𝟐𝟐 𝐚𝐬𝐬𝐮𝐦𝐢𝐧𝐠 𝐧𝐨 𝐟𝐮𝐫𝐭𝐡𝐞𝐫 𝐩𝐨𝐥𝐢𝐜𝐲 𝐦𝐢𝐬𝐬𝐭𝐞𝐩𝐬.” “𝐅𝐫𝐨𝐦 𝟐𝟎𝟐𝟑 𝐨𝐧𝐰𝐚𝐫𝐝𝐬, 𝐡𝐨𝐰𝐞𝐯𝐞𝐫, 𝐩𝐨𝐥𝐢𝐜𝐲 𝐦𝐢𝐬𝐭𝐚𝐤𝐞𝐬 𝐚𝐫𝐞 𝐲𝐞𝐭 𝐚𝐠𝐚𝐢𝐧 𝐥𝐢𝐤𝐞𝐥𝐲 𝐭𝐨 𝐬𝐞𝐭 𝐓𝐑𝐘 𝐨𝐧 𝐚 𝐰𝐞𝐚𝐤𝐞𝐧𝐢𝐧𝐠 𝐭𝐫𝐚𝐣𝐞𝐜𝐭𝐨𝐫𝐲.” The Turkish lira halted its depreciation in levels just below the 14.00 mark vs. the US dollar at the end of the week, all amidst a narrow trading range in USD/TRY. USD/TRY remains poised for extra gains: USD/TRY seems to have met quite a decent barrier near 14.00 the figure on Friday, although it managed to record new highs for the year, nonetheless. In the meantime, 𝐭𝐡𝐞 𝐥𝐢𝐫𝐚 𝐫𝐞𝐦𝐚𝐢𝐧𝐬 𝐮𝐧𝐝𝐞𝐫 𝐬𝐜𝐫𝐮𝐭𝐢𝐧𝐲 𝐚𝐦𝐢𝐝𝐬𝐭 𝐭𝐡𝐞 𝐜𝐮𝐫𝐫𝐞𝐧𝐭 𝐟𝐞𝐞𝐛𝐥𝐞 𝐨𝐮𝐭𝐥𝐨𝐨𝐤, 𝐰𝐡𝐢𝐜𝐡 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐞𝐱𝐚𝐜𝐞𝐫𝐛𝐚𝐭𝐞𝐝 𝐚𝐟𝐭𝐞𝐫 𝐢𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧 𝐟𝐢𝐠𝐮𝐫𝐞𝐬 𝐫𝐞𝐜𝐨𝐫𝐝𝐞𝐝 𝐚 𝟏𝟗-𝐲𝐞𝐚𝐫 𝐩𝐞𝐚𝐤 𝐛𝐞𝐲𝐨𝐧𝐝 𝟑𝟔% 𝐢𝐧 𝐭𝐡𝐞 𝐲𝐞𝐚𝐫 𝐭𝐨 𝐃𝐞𝐜𝐞𝐦𝐛𝐞𝐫 (𝐌𝐨𝐧𝐝𝐚𝐲). From the Turkish cash markets, yields of the 5y and 10y bonds reverse the recent multi-session weakness and resume the upside to past the 24% mark and just above 23%, respectively. The recent decline in yields have been promoted by purchases of government debt by the Turkish central bank (CBRT) according to latest news. What to look for around TRY: The lira resumed the downtrend while market participants continue to digest the recent inflation figures and the government scheme to protect deposits in the domestic currency. The reluctance of the CBRT to change the (collision?) course and the omnipresent political pressure to favour lower interest rates in the current context of rampant inflation and (very) negative real interest rates are forecast to keep the lira under intense pressure for the time being, That said, another visit to the all-time high north of the 18.00 mark in USD/TRY should not be ruled out just yet. Eminent issues on the back boiler: Progress (or lack of it) of the new scheme oriented to support the lira. Constant government pressure on the CBRT vs. bank’s credibility/independence. Bouts of geopolitical concerns. Much-needed structural reforms. Growth outlook vs. progress of the coronavirus pandemic. Potential assistance from the IMF in case another currency crisis re-emerges. Presidential elections in 2023. 𝐔𝐒𝐃/𝐓𝐑𝐘 𝐤𝐞𝐲 𝐥𝐞𝐯𝐞𝐥𝐬: So far, the pair is losing 0.24% at 13.7871 and a drop below 12.7523 (weekly low Jan.3) would pave the way for a test of 11.9694 (55-day SMA) and finally 10.2027 (monthly low Dec.23). On the other hand, the next up barrier lines up at 13.8967 (YTD high Jan.3) followed by 18.2582 (all-time high Dec.20) and then 19.0000 (round level). 𝐓𝐞𝐜𝐡𝐧𝐢𝐜𝐚𝐥𝐬 𝐚𝐫𝐞 𝐟𝐮𝐭𝐢𝐥𝐞 𝐮𝐧𝐝𝐞𝐫 𝐬𝐮𝐜𝐡 𝐟𝐮𝐧𝐝𝐚𝐦𝐞𝐧𝐭𝐚𝐥 𝐝𝐫𝐢𝐯𝐞𝐫𝐬 𝐚𝐧𝐝 𝐰𝐢𝐥𝐝 𝐩𝐫𝐢𝐜𝐞 𝐚𝐜𝐭𝐢𝐨𝐧 𝐚𝐬 𝐭𝐡𝐢𝐬, 𝐛𝐮𝐭 𝐧𝐞𝐯𝐞𝐫𝐭𝐡𝐞𝐥𝐞𝐬𝐬, 𝐢𝐟 𝐭𝐡𝐞𝐫𝐞 𝐢𝐬 𝐭𝐨 𝐛𝐞 𝐬𝐭𝐚𝐛𝐢𝐥𝐢𝐭𝐲, 𝐭𝐡𝐞𝐧 𝐭𝐡𝐞 𝐫𝐚𝐧𝐠𝐞 𝐚𝐫𝐞 𝐛𝐞𝐭𝐰𝐞𝐞𝐧 𝟏𝟏.𝟎𝟎𝟎𝟎 - 𝟏𝟔.𝟎𝟎𝟎𝟎 - BUYING PRESSURE PRICE 10.2000/11.3000 - Our option for #USDTRY is TO WAIT FOR BUYERS DECISION PRICE ACTION WITH A SECOND CONFIRMATION. - Economy BUBBLE has happened or is close to !! - The outlook and the overall trend for the pair is SO BULLISH . - 𝗜𝘁’𝘀 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁 to keep in mind that cryptocurrency markets are extremely volatile, making it difficult to accurately predict what a coin’s price will be in a few hours or a few days and even harder to give long-term estimates. As such, analysts and online forecasting sites can get their predictions wrong. We recommend that you always do your own research and consider the latest market trends, news, technical and fundamental analysis , and expert opinion before making any investment decisions. Be patient and look long term wisely and never invest more than you can afford to lose. Trading & Investing both are the master of RISK. Please comment, like and follow if it was helpful for you. Thank you for your time. Have a profitable day. | Review and analysis by Samadi.Finance |
by AliSamadiTR
9
ridethepig | Turkish Lira Strategy🔸 Ceilings and profit taking I am starting to unwind partials in the USDTRY longs with all of these moves so full of energy in the current chapter it wont be long until the retailers and bloomberg crowd are on board. There is lots of thunder and lightening across the global economy, Turkey will catch more than the sniffles but it is prudent we stick to the plan - the same plan since 2018 (yes 2018). In this position, wave 5 was an obvious impulse, because after buyers held support they could then start to promote their positions and adding to winners. The 30% upside once looked miles away and is now shining us right in the face, will sellers dare to come out? Will other sharp speculators riding this for months/quarters want to also take profits? If buyers hold 7.82xx it will trigger the collapsing of local banks, so we make this play with a heavy heart. It would be interesting to investigate further whether we will get the intermediate highs in USDTRY, so lets leave some partials running incase we get capitulation...
by ridethepig
4
ridethepig | Thoughts on Turkish Lira📌 The capitulation After PA in December 2018 showed us the basing formation it has been all 'one way trafffic' This may lead you to wonder why it is so important to understand the fundamentals and definition of current capital flows, because it is then possible to build one's whole swing around a macro fundamentally sound trade idea, that underpins the technical ebb and flow tactics. Of course we continued to pile on longs all the way up, our confidence in the swing was building which influenced the way we were able to construct the trade and future of the operation. Here I must highlight that the move does not last for ever; a full blown +50% move in a currency crops up occasionally, in fact even more you can see the need to capitalise on these moves. So, as we approached the start of the 'flash crash' or up in this case, the following additions were made: Then suddenly it happens, the almost powder runs dry in Turkish local banks and we get the momentum higher. It shows how hollow and uninteresting currencies can be, very straightforward when used in the safe little world of macroeconomics. A quick update on the initial leg of the Q3 flows we were tracking live: The final motive to clear was nat gas being discovered, the threat of continuing higher is very high and therefore logical to trade. Funding rates are casually moving higher but with no sense of urgency which of course is linked to the entire defence system for sellers at 7.80. Now it's important to load off of the previous resistance in the first leg of Q3 at 7.20, for a move into the final macro targets above at 7.80xx right on time for the elections. Thanks as usual for keeping the feedback coming 👍 or 👎
Long
by ridethepig
ridethepig | TRYBuyers have made the transition towards capitulation. This leaves Turkey with a huge problem, and the process of the cleanse in local banks will continue. CBRT will defend with its 'customary inventiveness' very soon as they keep a stern eye on 7.8xx. It is an unfortunate position that Turkey are in. We have exploited it for some time and as soon as the banking collapse makes it way onto Bloomberg and etc it's time to start looking at closing out. Well done all those who sent their troops to the buy side, a massive +30% swing so far and counting. After the break through 6.78 it has continued to grind its way to the wearisome target. This is the real point in the manoeuvre, which forces us to stay alert and protect profits as we approach the final targets in the unstoppable macro advance. A superb live example. Thanks as usual for keeping the feedback coming 👍 or 👎
Long
by ridethepig
11
ridethepig | TRY Q3 Macro Flows 📌 The buyers constitute a formidable opponent holding the breakup and putting sellers out of action. The moves are ready, to fend off another wave of risk looks impossible now and Turkey will suffer a major hammer that may be unendurable for local banks. A break above 7.20xx will unlock the widely track 7.80xx since last year. If buyers hold (and it looks a done deal now) for this monthly closing pattern it means we are ready to march forward in August and September to cripple EM FX. But if sellers hold at the end (seems very difficult with USD shortages entering back into play) then buyers are kept busy. Naturally continue to follow the macro strategy, on account of the 2020 macro flow map: Another move that would be difficult for Turkey to defend against. If you are bearish, continue sticking the knife in via buying USDTRY because it would no longer be possible to prevent the settling above 7.20xx. 📍 The other important note to make is the lack of foreign inflows... rather the opposite, heavy outflows continue with overseas participation in Turkish bonds now at record lows, as is usually the case in the end of dictatorships. There is nowhere for the CBRT to hide.. they will have to devalue the TRY to offset the loss in access to markets. Take a look over at EURTRY which is still up at ATH's ... this retrace is profit taking in the dollar train rather than Turkey stabilisation. Stay long, look for 7.80xx as the main macro target by year-end. As usual thanks for keeping the feedback coming 👍 or 👎
Long
by ridethepig
4
ridethepig | Thoughts and Themes in TurkeySwings and position building We have witnessed a tremendous amount of profit taking after clearing the 7.23 targets in USDTRY and are arriving back into major support territory. The pick-up in local activity was notable as banks were forced to defend the TRY. Many clients I speak to are happy to continue buying USDTRY , the picture looks gloomy for Turkey and real money continues to sit on the bid. On the monetary side, the CBRT cutting by 50bps was widely expected although wont make much difference at this stage. EM FX will remain under pressure if we see a broad risk-off environment this week. Keeping a close ear to the wires for any updates on swap lines, those looking for positioning in USDTRY should always think about loading in a safe place. Such a shelter will render us a superb shelter when the storm hits shore... A massive 30% macro swing after an obvious mistake from Erdogan. Turkey will remain sluggish until they expose the issues underneath, the correct idea would be to put pressure on CBRT which is what markets are doing and show no signs of stopping in the Short-term. Here 7.80 would be the measured target in the shelter then profit taking can begin again. As with any swing, it is important we assess the downside to see if we find something which is to our advantage. The dollar devaluation is the only technique that the Fed can construct, the only defence left in the toolkit is -ve rates and like a scout putting up his tent we must prepare. Depending on how quickly markets begin to price negative rates in USD, we may fail to complete the mission towards 7.80.
Long
by ridethepig
3
ridethepig | Sticking The Knife In TRYTurkey continues to stand out on the EM FX board, USDTRY finding strong support at the 5.97xx with sizeable USD demand signals from local Turkish banks. These same banks will be quick to cover should we breach the 6.00 handle and vulnerable to a squeeze once engaged. In the very immediate term EM FX will be hijacked by the ebb and flow of coronavirus headlines and the spillover effects on growth. Regular readers will know I have been a bear on Turkey for years, this environment will not attract any fresh RM inflows into Turkey - just take one look at the yields and the CBRT cutting cycle. On the technical side, the breakout we traded unlocked 7.80xx for the year. Reassessment on the bearish view is only required on a break of the 4th wave support located below at 5.4xx. The upside is wide open and will trigger the dominos in the collapse of Erdogan and Turkey as we know it. As usual thanks for keeping your support coming with likes, comments and etc!
Long
by ridethepig
2