Wed. Dec 8th, 2021

The Turkish lira reached its highest level against the US dollar in six months. The country’s economic and legal reforms announced last year, along with tighter monetary policy, appear to be having the desired effect. USDTRY is falls by 19.3% compared to the maximum of November 2020 having been on an upward trend since mid-2008.

However, most analysts are surprised at how quickly the couple reacted to political and monetary decisions. The Elliott Wave analysis, on the other hand, helped us predict the decline of USDTRY. On August 30, 2020, we wrote that a bearish investment was to be expected as the couple was “set up to complete a 12-year momentum pattern”. Then, on November 20, with the reversal already established, we released the following chart as a short-term update.

USDTRY is developing as predicted by Elliott Wave analysis

Three months ago, USDTRY was trading at around 7.6000. The descent from 8.58 seemed a full five-wave impulse, called i-ii-iii-iv-v. From each impulse is followed by a three-wave correction, we thought “a concentration of up to 8.0000 makes sense in the short term“Before the bearish trend can resume.

This is not the time to bet on USDTRY bears

A few days later, the pair reached 8.04 and have since been in a downward spiral. Today it has dropped to 6.9129 and the bears seem to control them tightly. Check out the updated chart below.

USDTRY bears remain monitored as the downward trend accelerates

Wave 2 developed as a simple zigzag ABC, where wave b was a triangle and wave c, a truncation. The next weakness should be part of wave 3. USDTRY now seems to be within wave iii of 3, the length of which cannot be predicted. However, since waves ii iv cannot overlap, the bears remain in office while 7,2400 remain. Also, the overall outlook suggests they could just get started.

The Turkish lira may continue to fall towards the 5.0000 mark against the dollar

The twelve-year uptrend since the low in 2008 seems to have ended at 8.58. This means that the current fall must be part of the corresponding three-wave setback. Corrections usually erase the entire fifth wave. In the case of USDTRY, this translates to a descent to the 5.0000 mark or less. If this analysis is correct, it is not the time to bet against the Lira.

Similar Elliott Wave configurations also occur in the stock, cryptocurrency, and commodity markets. Our Elliott Wave video course can teach you to discover them for yourself.


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