In my last review, I wrote that I am waiting for the realization of the “Head-Shoulders” reversal pattern downward with the potential for the Mosbirge index to enter the 2860-2870 point zone.
And according to the results of Thursday, when, after setting a minimum at around 2858.55 points, the ruble indicator turned upward and ended the day with a combination of “bullish” engulfing, I think we can safely say that the decline has achieved its goals.
The current levels are ideal for setting the final lows, since a 61.8% correction to the growth of 2703.35-3090.42 points falls at the mark of 2851.21 points, and the slow moving average EMA100 passes through the level of 2865 rubles the other day, and uptrend support line from May 14.
So there are more than enough reasons to organize a rebound from the 2850-2870 point zone.
In addition, if you go to the four-hour chart, you can see on it that the downward movement from August 27 developed in the form of a descending “wedge” and this figure is best seen on the RSI oscillator chart. By the way, the “wedge” has already been broken upwards on the RSI.
What does this information give us?
First, most often wedges are formed in the last waves, and the realization of the pattern returns the quotes (in our case, the index) to the beginning of its formation.
For me, the movement from 3090.42 to 2858.55 points is well decomposed into 5 waves, where the extension was in the last wave. Moreover, there was an ideal fulfillment of the condition, where 423.6% extension to the sum of waves 3 + 5 gives the target of descent in the form of a level of 2868.70 points + easy flight.
Secondly, there are several important supports at once, which converged in the zone of 2850-2865 points and formed a bundle of supports. Among them are horizontal support levels in the area of 2855.95-2861.60 points, corresponding to peaks on July 6 and March 5.
Thus, I believe that in the near future our market will draw a corrective upward rebound to the previous decline, which may take a couple of weeks.
The minimum target of the rebound is a 50% Fibonacci retracement and growth to 2974.50 points. But if this is wave 2, then it can give 61.8%, and in some cases even 76.4%.
Close to the last two frontiers, it is already worth looking closely at the opening of new sales, but for now it’s time to pick up noticeably thinner securities and bet on their rebound.
There is only one small nuance – this is oil, which has not achieved its targets in the $ 37.50-38 per barrel zone. On some day, the oil market will certainly sell them, and since there is an open gap below Brent at the level of $ 35.33-37.18 per barrel, I believe that it will act as a powerful support zone from which quotes can try to resume if not growth, then a local rise.
At this point, when the lower targets for oil are hit, our market may still seem weak, some securities may slightly update their lows, while others will remain higher. But one way or another, for the next week I am expecting a recovery.
Scavo (Ignatenko) Anastasia