September ended and with it the third quarter of 2020. The Russian stock market, represented by the Moscow Exchange Index, looks good, although the risks of further decline are still present.
In my opinion, the market may still show lows on the cut-off day for Sberbank or the next day, after which I will wait for a recovery.
According to my calculations, the Mosbirzhi index is in the final wave of the decline. From the peak of 3090.42 points, it is easy to consider a five-wave downward movement, where there is already a wave of 1: 3090.42-2973.11 points; wave 2: 2973.11-3056.25 points; wave 3: 3056.25-2858.65 points (which was 161.8% of wave 1) and wave 4: 2858.65-2990.74 points.
Thus, I believe that wave 5 started from the level of 2990.74 points. It has already fulfilled the minimum condition, where 5 = 1 – this is the level of 2873.43 points + a reversal of the level of 2858.65 points.
But since the daily chart now looks like a “triangle”, which is typical for wave 4, I still assume that we have not seen the end lows yet. Ahead of us is an 8% drawdown of Sberbank securities, whose weight in the index is 14.02%, in connection with which I believe that it is worth considering the option where 5 = 161.8% of 1, in this case the target of the descent is the mark 2800.93 pips.
And if you postpone the entire height of the “triangle” figure down, then there is also a chance of a rollback to the area of 2760 points. By the way, if we overlay the Fibonacci grid on the growth that began on May 14, that is, when the index came out of the consolidation upward, then the level of 2765.36 points accounts for a 61.8% retracement level. And the stability of this line will become an additional basis for the rebound game.
I am not considering more negative options now.
Let’s summarize. So, the minimum condition has already been met, because thanks to the descent to the level of 2857.78 points, the wave 3 minimum has already been updated – the mark of 2858.65 points, and this may be enough. The confirmation of the reversal will be the breakdown of the “triangle” figure upwards, not downwards. Relevant when the H4-D closes above 2950 points.
In case of going down from the figure, there are two probable targets for the descent – the area of 2800 points and 2760-2765 points, near which, in the presence of reversal signals, it will be possible to make purchases counting on the subsequent rebound of the market upward.
Scavo (Ignatenko) Anastasia
Added statistics for September