Emerging-Market Currency Slide Doesn't Break the Ongoing Trend

  • Rand, lira and ruble are merely snapping back toward averages
  • Key moving averages have provided support for several months

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While Thursday’s sell-off is raising questions on whether emerging-market currencies are looking vulnerable, chart patterns suggest that this isn’t the beginning of the end, but just a natural reversion to key moving averages.

The rand led losses, trimming this year’s gain versus the dollar to less than 2 percent. Still, the currency is now approaching its 233-day moving average at 13.7062 per dollar, which has held as support for almost a year now.

The lira is hovering between its 55- and 100-day moving average. So long as dollar-lira remains below the latter, the trend would favor strength in lira.

The ruble is approaching support at its 100-day moving average of 58.1108 per dollar. The last time it fell below the average, the currency bounced back almost 1.5 percent in the next two days.
 

  • NOTE: Sejul Gokal is a technical strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice
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