Sergey Kamenshikov, Ph.D.
IFC Markets
Trading commodity currency
Brent crude oil price, ruble denominated, has deviated significantly for the 4th time from its 200-day moving average (MA). Last three times it returned back to the MA. Will it happen once again now?
The share of fuel&energy goods in Russian export is 65% which is quite a lot, according to Federal Customs service of Russia. This explains the high dependence of the Russian ruble from the global markets oil price. The cheaper oil makes ruble lose its value against the US dollar, as a result, the Brent chart in rubles gravitates toward its average line. The chart depicting the percentage change of the ruble exchange rate and the oil illustrates that the instruments move oppositely directed. The oil has fallen in price much more than the ruble since early 2015, as the ruble devaluation mainly took place in 2014.
YTD
Brent_RUB
On the daily chart Brent_RUB:D1 has verged the support line of the neutral trend. All indicators give the sell signals. The hypothesis that the trend can turn to the bullish and head towards its 200-day moving average is based upon the interconnection of the ruble rate and the global oil prices. Thus, we can consider the possibility of buying this personal composite instrument (PCI) at market near the trend line. The initial risk limit is possible below the year low at 2970. Having opened the delayed order, the stop shall be moved following the Bollinger bands and Parabolic signals to the next fractal low. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade.
Position Buy
Buy at market
Stop loss below 2970
Brent crude oil price, ruble denominated, has deviated significantly for the 4th time from its 200-day moving average (MA). Last three times it returned back to the MA. Will it happen once again now?
The share of fuel&energy goods in Russian export is 65% which is quite a lot, according to Federal Customs service of Russia. This explains the high dependence of the Russian ruble from the global markets oil price. The cheaper oil makes ruble lose its value against the US dollar, as a result, the Brent chart in rubles gravitates toward its average line. The chart depicting the percentage change of the ruble exchange rate and the oil illustrates that the instruments move oppositely directed. The oil has fallen in price much more than the ruble since early 2015, as the ruble devaluation mainly took place in 2014.
YTD
Brent_RUB
On the daily chart Brent_RUB:D1 has verged the support line of the neutral trend. All indicators give the sell signals. The hypothesis that the trend can turn to the bullish and head towards its 200-day moving average is based upon the interconnection of the ruble rate and the global oil prices. Thus, we can consider the possibility of buying this personal composite instrument (PCI) at market near the trend line. The initial risk limit is possible below the year low at 2970. Having opened the delayed order, the stop shall be moved following the Bollinger bands and Parabolic signals to the next fractal low. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade.
Position Buy
Buy at market
Stop loss below 2970
This overview has an informative character and is not financial advice or a recommendation. IFCMarkets. Corp. under any circumstances is not liable for any action taken by someone else after reading this article.
Recommended Content
Editors’ Picks
AUD/USD remains firm above 0.6600 ahead of RBA
AUD/USD maintains its bullish bias well and sound on Monday, extending the multi-session recovery past the 0.6600 barrier ahead of the key interest rate decision by the RBA.
EUR/USD keeps the constructive tone near 1.0800
EUR/USD started the week in a positive note amidst the Dollar’s inconclusive price action, altogether motivating the pair to attempt a move to the proximity of the 1.0800 region, where the 200-day SMA also converges.
Gold holds on to modest gains around $2,320
Gold trades decisively higher on the day above $2,320 in the American session. Retreating US Treasury bond yields after weaker-than-expected US employment data and escalating geopolitical tensions help XAU/USD stretch higher.
Bitcoin price holds above $63K as MicroStrategy tops BTC ownership list
Bitcoin (BTC) price recorded a rather bold two days this past weekend in a surge that saw millions in positions liquidated. However, the week is off to a calm start with altcoins sucking liquidity from the BTC market.
Stagflation warning: Service economy contracts as prices rise
In another stagflation warning sign, the U.S. service sector contracted in April even as service prices rose. The Institute for Supply Management's non-manufacturing PMI dropped to 49.4 in April, dipping from 51.4 in March.