{"id":28787,"date":"2015-07-30T19:44:53","date_gmt":"2015-07-31T02:44:53","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=28787"},"modified":"2015-07-30T19:44:53","modified_gmt":"2015-07-31T02:44:53","slug":"trading-lessons-from-the-elections-in-turkey","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2015\/07\/30\/trading-lessons-from-the-elections-in-turkey\/","title":{"rendered":"Trading Lessons from the Elections In Turkey"},"content":{"rendered":"

(This is an excerpt from an article I originally published on Seeking Alpha on June 14, 2015. Click here to read the entire piece<\/a>.)<\/strong><\/p>\n

Turkey held national elections on June 7th. The events were well-covered given Turkey’s central location amid a set of geopolitical hotspots and its (former) place as a fast-growing emerging market.<\/p>\n


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\"Turkey<\/a>
Turkey sits amid several geopolitical and economic hotspots<\/figcaption><\/figure>
\nSource: Google Maps<\/a><\/strong>
\n<\/center><\/p>\n

The elections had a strong impact on the Turkish lira and the Turkish stock market. The trading action provided another one of those great demonstrations of trading on a market narrative.<\/p>\n

{snip}<\/p>\n

From the perspective of the presumed operating narrative, the market’s reaction made little sense to me. So I faded pops higher on USD\/TRY from Sunday through Wednesday for very short-term trades. {snip}<\/p>\n


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\"Quick<\/a>
Quick trigger post-election trading against the Turkish lira quickly gives way to some relief<\/figcaption><\/figure>
\n<\/center><\/p>\n

At the time I was fading USD\/TRY, I did not realize that Turkey’s central bank moved quickly to try to support the currency. {snip}<\/p>\n


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\"The<\/a>
The overall trend for USD\/TRY remains firmly upward<\/figcaption><\/figure>
\n<\/center><\/p>\n

While my read of the narrative worked out, I stopped short of anticipating a complete fill of the post-election gap. {snip}<\/p>\n


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\"The<\/a>
The post-election dumping of the Turkish lira did not last long<\/figcaption><\/figure>
\nSource for above charts: FreeStockCharts.com<\/a><\/strong>
\n<\/center><\/p>\n

As the chart above shows, it is very easy to see from a technical perspective how USD\/TRY could complete a gap-fill. Such a move would perfectly align with the converged 20 and 50-day moving averages (DMAs). I would look to accumulate more in that case, but end the trade if downward momentum persists.<\/p>\n

The narrative going-forward is more complicated because at any time, encouraging news about the formation of a government could generate more downside for USD\/TRY. Moreover, the central bank could take further actions to try to support the currency. If either event occurs, I will be inclined to switch the trading bias n USD\/TRY back to short.<\/p>\n

{snip}<\/p>\n


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\"Did<\/a>
Did iShares MSCI Turkey (TUR) just print a double bottom?<\/figcaption><\/figure>
\n<\/center><\/p>\n

Be careful out there!<\/p>\n


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