IFC Markets - Analytics

    IFC Markets

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    Technical Analysis &WHEAT/RUB : 2015-08-03

    Probable growth resumption

    Today we would like to present to you the &WHEAT/RUB personal composite instrument. Its base part includes a wheat CFD, while the quoted part contains the Russian rouble. The PCI actually represents the price in roubles for 100 bushels or 2722 kilos of wheat. The PCI's dynamics are mainly determined with global wheat prices and the rouble value rather than with wheat crops in Russia. The WHEAT/RUB instrument may continue growing. In order for this to happen it is desirable that wheat prices grow in the US dollars and the rouble weaken. Since mid-May the Russian currency plunged more than 25%. This looks like a rally on the USD/RUB chart. The rouble was driven down by droping global oil prices (carbohydrates account for more than 70% of the Russian export). Moreover, Western sanctions have a negative impact on the economy. Last week the Russian central bank cut the rate to 11%. The next regular meeting will take place only September, 11. We may assume that till then the rouble will sustain the current downtrend. Global wheat prices have been showing sharp fluctuations since mid-May but have not changed much.


    On the daily time frame the &WHEAT/RUB PCI has been traded in an uptrend. The chart is located above the 200-day Moving Average. Bollinger Bands narrowed, indicating low volatility. MACD bars have a very small amplitude and do not give clear signals. Parabolic has shaped a buy signal. RSI-Bars has been growing and has formed bullish divergence. It has breached 50 but has not yet reached the overbought zone. The bullish momentum may develop if another WHEAT/RUB bar closes above the latest fractal high at 30800. The most cautious traders may wait until the price crosses the Parabolic signal high at 31160. A stop loss may be placed below the 2 fractal lows, the 200-day Moving Average and the Bollinger band at 28400. The first Parabolic signal at the same level may now act as a support line. After pending order activation the stop loss is supposed to be moved every four hours to the next fractal low, following Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most careful traders are recommended to switch to the H4 time frame and place a stop loss there, moving it after the trend. If the price reaches the stop loss without triggering the order, we recommend to cancel the position: the market sustains internal changes that were not considered.


    Position Buy
    Buy stop above 30800 or 31160
    Stop loss below 28400

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