The Turkish Lira has gained a modest 0.1% in its pairing with the US Dollar, after data released late Friday showed that Turkish Manufacturing Confidence grew from 106.8 in December 2020 to 107 in January 2021. This allowed the USDTRY to extend its downside slightly, following the bearish move that accompanied the CBRT’s decision to hold interest rates at 17.00%.
However, the downside move remains capped as Capacity Utilization fell from 75.6% in December to 75.4% in January 2021. The USDTRY finds itself trading in a narrow range, but remains lower at the time of writing.
Technical Levels to Watch
The bearish flag pattern on the daily chart of the USDTRY remains valid. Price action is testing the lower border of the flag, which also rests on the 7.39840 support level. A breakdown of the support and the flag is the expected outcome of this pattern. If this happens, then 7.26356 becomes the initial target, with 7.19656 also lining up as an additional target to the south.
The flag’s measured move is expected to terminate at a price projection point around the 6.89410 support level. Sellers must therefore take out the support levels at 7.08515 and 6.99821 for this move to be completed.
On the flip side, bulls are expected to find joy if the price bounces from the present support and pushes above the flag. This move would require 7.51705 to be broken to the upside, with 7.69700 then forming a new upside target. This move also invalidates the flag and allows for the potential of an advance that may also present 7.83210 as an additional upside target (78.6% Fibonacci retracement from the swing high of 11 December 2020 to the swing low of 7 January 2021).
USDTRY Daily Chart