This is one of my favorite pairs, the TRY/JPY. This is because it pays such a nice swap, and in an environment where there is almost no yield, that of course will attract a certain amount of money regardless. On top of that, it is a purely alpha plan the sense that the Japanese yen is indeed a safety currency, while the Turkish lira is more or less a play on emerging markets and perhaps the Middle East.

With that, once the environment in the trading community is conducive to taking risk, this pair typically takes off to the other side. However, you get paid to wait, and as a result I love holding onto the straight for the longer term most of the time. A nice range bound market can actually be very profitable in this particular pair, and I believe that there is a significant chance that we will see a breakout to the upside anyway.

No man’s land.

You can see that I have two lines clearly marked on the chart. Think of this as two trenches on a battlefield. You essentially have buyers and sellers doing battle with each other, and somewhere in the middle is why it would be considered “fair value.” In other words, it’s where the market thinks that the currency pair should be at the moment. However, you can’t really take a trading that general vicinity because it’s a very good way to lose money. Essentially it’s a 50-50 chance that the market goes your direction. With that, I’m very hesitant to put trading capital to work at this point. However, if we can pull back to the 47.50 level, I think that the buyers will step back in and push this market higher. That’s the type of setup I’m looking for in order to go along of the Turkish lira again. In the meantime, I’m simply waiting for some type of supportive candle near that region. Alternately though, if we broke above the 49.50 level, I would be willing to buy as well because it would of course be a breakout of a significant consolidation area.

TRYJPY 72814

Related Articles
  1. Fundamental Analysis

    The Basics Of Corporate Structure

    CEOs, CFOs, presidents and vice presidents: learn how to tell the difference.
  2. Investing

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
  3. Investing

    Latin America’s Economic Forecast

    After a ten-year run, the economies of Latin America are in a decline. For sustainable, long-term growth, the region needs structural reforms.
  4. Professionals

    Illiquid Real Estate: Correlation Pros and Cons

    Stock and bond markets are moving more closely in tandem with each other. Is illiquid real estate the vaccine for this correlation?
  5. Professionals

    How to Manage Fixed Income as Interest Rates Rise

    A look at how to manage fixed income amid the specter of rising rates, correlation to stocks, client expectations and more.
  6. Mutual Funds & ETFs

    Passively Managed Vs. Actively Managed Mutual Funds: Which is Better?

    Learn about the differences between actively and passively managed mutual funds, and for which types of investors each management style is best suited.
  7. Economics

    Why the Euro Failed to Become the World's Reserve Currency

    Examine the current state of the U.S. dollar as the world's reserve currency; learn the major reasons why the euro has failed to replace it in that capacity.
  8. Mutual Funds & ETFs

    4 Mutual Funds Warren Buffet Would Buy

    Learn about four mutual funds Warren Buffett would invest and recommend to his trustee, and discover detailed analysis of these mutual funds.
  9. Investing

    The Top Businesses Nurtured By Y Combinator

    We look at the top startups that were incubated at Y Combinator, one of the world's most popular business incubator firms.
  10. Professionals

    Want to Start Up an RIA? Expect These Hurdles

    RIAs looking to strike out on their own need to overcome and plan for a number of hurdles.
  1. Are Cafeteria plans taxable?

    Whether the benefits you receive through your employer-sponsored cafeteria plan are taxable depends entirely on which benefits ... Read Full Answer >>
  2. Can mutual funds only hold stocks?

    There are some types of mutual funds, called stock funds or equity funds, which hold only stocks. However, there are a number ... Read Full Answer >>
  3. How do mutual funds compound interest?

    The magic of compound interest can be summed up as the concept of interest making interest. On the other hand, simple interest ... Read Full Answer >>
  4. Who decides to print money in Russia?

    The Central Bank of the Russian Federation (CBRF), like its peers in most countries, is the governmental entity responsible ... Read Full Answer >>
  5. Does working capital include prepaid expenses?

    The calculation for working capital includes any prepaid expenses that are due within one year, since such prepaid expenses ... Read Full Answer >>
  6. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!