After the massive Lira swings in the days before the local elections,
there have now been five days with long upper wicks worth thousands
of pips: these wicks all retreated below the 200-day moving average,
as this picture shows:
What this picture also shows is that the black broken lines that I had
put in a few months ago are still valid, namely a 4000-pip range that
EUR/TRY is still unable to break.
The massive swing high that we saw three weeks ago was not a true
break and due to unprecedented conditions that were not to last.
Alongside professional traders caught in the Turkish banks lock on
Lira liquidity in the run-up to the elections, I was lost in turbulent
conditions. Trying to stay on the ‘right’ side of these movements
proved very costly and I lost about £3k on my demo account.
Prior to these conditions, the pair had been rising for about five weeks
and it seemed set to rise further. Right now, the tables seem to have turned
and we may be back to Lira strength: I am short EUR/TRY once again, possibly
for a few weeks, trying to rebuild what has been lost, and assuming more stable
The MSCI Turkey ETF has shown big buy-volume swings (green columns) in the
run-up to the elections, but the ETF price stayed flat: then, there was a pick-up in
price, this time with a modest volume, which may explain the move south in EUR/TRY
since the start of the week:
The main lesson here is to learn when to stay out of trading in unknown market conditions
(rather than trying to weather the storm). Holding short would have been a better outcome,
but then again there were signs of the uptrend continuing: difficult judgments had to be made.