Technical Analysis EURTRY : 2019-08-21

[IFC Markets]

Turkish Central Bank lowers reserve requirements
In this review, we suggest to consider the currency pair Euro against the Turkish Lira. Is the growth of EURTRY quotations possible? Such dynamics is observed with the weakening of the Turkish lira and the strengthening of the euro.

The Central Bank of Turkey has lowered the reserve requirement to increase lending to the economy by the banking sector. Such measures can be considered as a softening of its policy and an analogue of money emission, which led to a weakening of the lira. The next meeting of the Central Bank of Turkey will be held on September 12. On the same day there will be a meeting of the ECB. The main risk for the single currency now is the budget crisis in Italy. The Prime Minister of this country, Giuseppe Conte announced his resignation on August 20, which caused a slight strengthening of the euro.

On the daily timeframe EURTRY: D1 exited the downtrend. Further growth of quotations is possible if the crisis in Italy is successfully completed and the monetary policy of the Turkish Central Bank is further relaxed.

• The Parabolic indicator demonstrates a signal to increase.
• The Bolinger bands widened, indicating high volatility. Both Bollinger Lines Slope Up.
  
• The RSI indicator is above the mark of 50. It has formed a divergence to increase.
  
• The MACD indicator gives a bullish signal.

The bullish momentum may develop if EURTRY exceeds its last maximum: 6.36. This level can be used as an entry point. The initial stop lose may be placed below the last two lower fractals and the Parabolic signal: 6.11. After opening the pending order, the stop shall be moved following the Bollinger and Parabolic signals to the next fractal minimum. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place a stop loss moving it in the direction of the trade. If the price meets the stop level (6,11) without reaching the order (6,36), we recommend to cancel the order: the market sustains internal changes that were not taken into account.

Technical Analysis Summary


Position Buy
Buy stop Above 6,36
Stop loss Below 6,11