Trade Recommendation: AUD/RUB

The Australian Dollar/Russian Ruble pair (AUD/RUB) looked toppish in December 2014 when it went as high as 64.318. At this price level, the pair was in extreme overbought territory. Those who followed the trend used the indicator to dump positions. The heavy selling drove the pair down to 37.725 in April 2015. In four months, the Australian Dollar lost over 41% of its value against the Russian Ruble.

After seeing that the market respected the 38.2% Fibonacci level, bottom pickers entered the buying scene. The increased demand sparked a rally that lifted the market back to 54 resistance in December 2015. However, AUD/RUB started to flash bearish signals at this point. A bearish divergence was spotted on the weekly chart. In addition, the 4-day, 9-day, and 21-day moving averages reversed their direction.

Those who saw the writings on the wall took profits or cut their losses. As the market succumbed to selling activity, the pair plummeted to 41.542 in June 2017. With a higher low in place, we may have an opportunity to generate a profitable trade.

Technical analysis show that the Australian Dollar/Russian Ruble pair is creating an ascending triangle pattern on the weekly chart. Currently, the triangle appears to be in the midst of a D-wave up. A breakout of 48 would affirm this view.

The strategy is to buy the breakout at 48. Once bulls take out the resistance, they are likely to ignite a rally to resistance of 54, which is our target. Sell immediately because the market will likely correct after it hits the resistance.

We’ll revisit this trade once the target is hit.

The process may take three months.

Weekly Chart of AUD/RUB

As of this writing, the Australian Dollar/Russian Ruble pair (AUD/RUB) is trading at 47.425.

Summary of Strategy

Buy: Buy breakout of 48.

Target: 54

Stop: 47 after the breakout.


Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.