EUR/RUB: Steady downtrend in force, possibility to head towards 63/62 in short term - SocGen

Analysts at Societe Generale notes that after having formed a significant top at upper limit of a steep channel near 98 in late 2014, EUR/RUB has embarked on a downtrend. 

Key Quotes

“Earlier this year, the pair approached towards those highs however it quickly reversed forming an evening star candlestick pattern which generally indicates a correction. Since then, it has been witnessing a steady down move and is now re-integrating within another channel drawn since 2000.” 

“EUR/RUB is likely to head towards 63/62, the 76.4% retracement from April 2015 lows. Monthly RSI is breaching a multiyear ascending trend which denotes a deeper downtrend can't be ruled out.” 

“When 63/62 gives way, it will mean a break below the steeper channel and in such a scenario; 2015 lows of 52 will be next prominent support.”

“If we drop down to weekly chart, the pair has been evolving within a bearish channel since January and has formed a large H&S pattern which usually shows signs of distribution. It is now giving a dual break below the neckline of the pattern and an up sloping trend drawn since 2014 (currently at 67/68).”

“Price break is being affirmed by weekly MACD which has settled in negative territory and has crossed below its trigger line. Thus, EUR/RUB looks to drift initially towards 63/62. A break below will mean possibility to reach next projections near 58 and more importantly towards aforementioned levels of 52.” 

“Neckline and graphical levels at 67/68 should cap near term upside while November highs of 73, also the 76.4% retracement from August should be an important hurdle.”