USD/RUB: Move below 60 will mean a deeper correction as H&S points towards further downside - SocGen

Research Team at Societe Generale views that the USD/RUB tentatively spiked above previous high at 79 last January and achieved projections for the fifth wave of an Elliot wave structure in force since 2008. 

Key Quotes

“Since then, it has shown a rapid reversal forming monthly Shooting Star candlestick. The pattern forms after prices achieve a significantly higher level during the session however those gains are not sustained and prices close around the same level where they opened. The pattern denotes exhaustion in uptrend and in this case it has become a precursor to initial leg of downtrend for USD/RUB.” 

“The pair is breaching below the monthly MA and is now approaching towards graphical support of 60.00 which corresponds October 2015 lows and the 61.8% retracement from April 2015 (log). Monthly stochastic is violating a horizontal support pointing towards possibility of a deeper correction.” 

“A move below 60 would indicate an extended down move initially towards an upward channel drawn since 2008 at 57/56 and even towards 2015 lows of 48.80. Graphical levels of 72 will now be an important hurdle.”

“On weekly chart, USD/RUB has been evolving within a broad Head and Shoulders pattern which is a bearish reversal formation.”

“The pair is now approaching towards the confluence of a mildly descending channel and an up sloping one drawn since December 2014 at 60. More importantly, this level also denotes neckline of the H&S.”

“Weekly RSI is close to a floor however a sustainable rebound has remained elusive. Descending channel at 66 should cap near term upside. A break below 60 will confirm the pattern and indicate a larger down move towards 57/56 with next intermittent projection at 52.50. 48.80 will be projected potential of the pattern.”