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USDRUB Technical Analysis
The Russian Rouble (RUB) suffered heavy losses against the US Dollar (USD) following the mass selling in crude oil across the board. It is no secret that the Russian economy is dependent on the country’s exports from natural gas and crude oil. The heavy selling in crude oil kicked USD/RUB bulls into action that drove the price to almost 53 before reversing, some speculate the Central Bank of Russia (CBR) has intervened in the Forex market to contain RUB selling. We have witnessed a similar scenario in the past where a central bank took steps to counter to strengthen its currency, Turkey. The Central Bank of the Republic of Turkey (CBRT) raised its interest rate on 29 January, 2014 to counter the selling of the Turkish Lira (TRY).
Please click on the chart to enlarge:
USD/TRY shed over +800 pips following the CBRT decision, which was anticipated by many trades in the Forex market. The CBR is due to hold its monetary policy meeting on 11 December, 2014 where a press conference will take place at 13:30 Moscow local time. In light of the recent currency crisis it would not surprise if an emergency meeting will be held beforehand to discuss the solutions for the crisis. One of the steps that is being discussed in the market is limiting capital flow or in other words preventing money from flowing out of Russia. I has been rejected in the past but would definitely cease the bulls from gaining further ground in USDRUB.
To support our bearish outlook for USDRUB we turn to daily chart to outline our strategy.
USDRUB Daily Chart
Please click on the chart to enlarge:
The shooting star says it all. The Japanese reversal pattern is distinct warning to the market bulls that a trend reversal may occur within the next 3 – 5 sessions. We cannot enter at market price as the requires stop would be monstrous. These are on of the rare times we would exercise an entry order to short USDRUB. The currency pair is extremely volatile, which demands an entry order if we were to capitalize over the expected weakness. We place our entry order at 52.850, beneath yesterday’s high. It is possible USD/RUB would re-test the highs (53.720) before reversing lower. It is a scenario we must acknowledge before placing the order. The protective stop loss order is located at 55.110, targeting 47.600.
One of the key advantages of shorting USDRUB is the positive swap at rollover, which is likely to exceed 80 points in your trading platform. We are not intimated by the spread as Dollar-Rouble can easily breakeven in less than an hour. The entry order must be executed by the end of today’s session (before the daily close). If towards the end of trading say the market has nor triggered our entry we would cancel the entry order unless we will update this strategy to say otherwise. You are welcome to review our latest market analysis at the homepage.
If our trading strategy plays as we anticipate a decent profit may be garnered from the short position by mid-December.
02/12/14 UPDATE: Please note there were moderate gains in USDRUB, which is currently trading at 51.282 at the time of this writing.
02/12/14 UPDATE II: USDRUB triggered our entry order, currently trading at 53.830 at the time of this writing. We are modifying the protective stop from 55.110 to 55.270.
03/12/14 UPDATE: USDRUB is trading at 53.59 at the time of this writing. We are maintaining our bearish outlook for the currency pair.
03/12/14 UPDATE II: USDRUB is trading at 53.10 at the time of this writing. Our bearish outlook has not been negated.
12/12/14 UPDATE: After collecting interest for some time the market price has triggered our protective stop loss order. Russia central bank raised rates on its meeting on Thursday but that actions did not contain USDRUB exchange rate. The loss has been absorbed by our recent trades in EURUSD and CAC40.
Trade alerts are also issued in the weekly update.