Global macro overview for 18/07/2016:
The market reaction to the attempted coup in Turkey was rather predictable. In most of the situations like this, the "fly to safe-heaven" behaviour is taking place all across the market board. It means that the assets like gold, the yen, US dollar and Swiss franc are being bought and risky assets, like the euro and main indices, are being sold. During the weekend, the situation in Turkey has somewhat stabilised and the military attempt to take over power was stopped. Currently, the markets are waiting for President Erdogan to deal with the situation effectively, but due to extremely fragile post-Brexit sentiment, geopolitical events of this nature expose market investors to short-term overreaction effects.
The best example of this overreaction effect is USD/TRY price action after the information of the coup were transmitted by the mass media, so let's take a look at the technical picture of this pair. The big up candle with low at the level of 2.8738 and high at the level of 3.0491 is the coup candle. Since that event is now gone, the price is slowly falling towards the nearest support around the 2.9300 level. Moreover, there is a cluster of moving averages around this zone as well, so it should provide good dynamic support for the market. At the larger time frame charts, weekly and monthly, the trend is still up, so bullish price action is being expected for now. The next important support is seen at the level of 2.7564 and the next important resistance, at the level of 3.0737.
