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USD/RUB (U.S. DOLLAR/RUSSIAN RUBLE)

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USDRUB

Parabolic moves are not sustainable. They are also not easy to trade. It is costly to pick a top or a bottom. Price usually doesn’t stop where we think it would stop. However as a chartist I feel the urge to bring such imbalances to your attention. Whatever the instrument, these type of price movements are the perfect case studies to examine crowd psychology. USD/RUB entered into a parabolic move after breaking above 36.50 – historical high level. Sharp reversals are experienced after such steep price actions. In the past, similar price movements took place on few other charts.

USDKES

In 2011, USD/KES (U.S. DOLLAR/KENYAN SHILLING) had a similar long-term breakout followed by a 8 month-long parabolic move. Steep price action was reversed by Central Bank of Kenya’s bold action to raise interest rates from 6 percent to 18 percent in less than a year.

KENYA INTEREST RATES

In 2008, Rough Rice price rallied from 11.45 to 25 levels. Rice made the headlines (news on Rough Rice). Hoarding and export bans were the result of the sharp price increase. Rough rice fell back to 11.45 levels in the following year.

ROUGH RICE

REAL, RUBLE and RUPEE

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Here are some of the emerging market currencies that I see vulnerable against the U.S. dollar in the medium/long-term. U.S. dollar had a strong rally against major cross rates and most of the emerging market currencies. In the short-term we might be due for a pull-back and some weakness for the U.S. dollar but in the medium/long-term we should keep a close eye on these EM currencies.

Brazilian real is weakening towards 2.45 levels. Last one years’ move formed a sideways consolidation. Breakout above 2.45 will be negative for BRL.

USDBRL

I drew attention to the earlier breakout on the Peruvian Nuevo Sol. This was a nice ascending triangle with the resistance at 2.82. Resistance becomes the new support.

USDPEN

Indonesian Rupiah is forming a consolidation right below the decade-long horizontal resistance. Breakout above 12,400 will cause long-term damage on this cross-rate.

USDIDR

Indian Rupee  held above the 3 year-long trend line. This shows that the uptrend is still intact. Unless we see USD/INR establishing a move below its 200-day average, I would favor USD against the Indian Rupee.

USDINR

Russian Ruble continues its slide against the U.S. dollar. Resistance at 36.50 became support. Unless price falls below 36.50, this chart is poised for higher levels.

USDRUB