It's hard to pick tops...but here's what to look for anyway
The USDTRY is trading to yet another record high. The price just moved to 5.28183. Threatened US sanctions and a stronger dollar has got the TRY tumbling lower (the USDTRY moving higher).
It is tough to pick a top in a trending market, but traders might be tempted to sell vs. buy. After all, it is at a lofty level.
However, to sell is going against the trend and trends are fast, directional and can go farther than you expect.
So what do you look for to tell you the trend might be over?
For me, I need a reason to sell. Just selling high is not a reason.
When I look the hourly chart, the price just broke above a topside channel trend line at 5.24935.2493. That trend line was tested on the last hourly bar and held. The current bar, backtracked modestly and then shot higher (above the line at 5.2493). That's bullish. I am not surprise that the sellers against the line, probably bought back on the break above.
Now other than that broken line, there is not a heck of a lot more above to stop the price That's ok for now as it simply says to me "Stay above 5.2493 is bullish. Move below and stay below that broken trend line is bearish.
Does it take news to come down? Not necessarily. The price run higher can run out of new buyers and the longs may simply not want the risk anymore, or want to take profit. Remember there is little to target above so that increases fear. That can turn the price lower, and if the trend line is broken, that can lead to more selling.
So at a record high, although it is tempting to sell high, it probably is best to wait for the market to give you the clue. For me, that means get below the broken trend line and then hope to stay below and rotate lower. If it happens, you can trade the corrective move and might get other longs who have enjoyed the run higher, turn to sellers and help your trade going. Until a support target is hit that is.....
