TRY/JPY 1H Chart: Lira stranded in two patterns

© Dukascopy Bank SA

The Turkish Lira has been weakening against the Japanese Yen during the past week, thus forming a falling wedge. This pattern was formed as a part of a senior ascending channel valid since early January. The pair bounced off the bottom boundaries of both patterns late on yesterday, thus testing its six-month low at 20.66. From theoretical point of view, the Lira should remain stable, breach the junior pattern and edge higher towards the 32.50 area in the medium term. In order to realise this scenario, the rate has to overcome a significant resistance area set by the monthly S3 and S2, weekly S2 and S1 and the 55-, 100– and 200-hour SMAs in the 30.20/60 territory. Even though some hindrance is likely to occur along the way, the pair should be able to overcome this area and appreciate during the following weeks. The southern side is limited solely by the aforementioned six-month low.