Why Is the Russian Ruble in Freefall?
On Tuesday (Dec. 16), reported Bloomberg,
“The ruble plummeted into a freefall, losing as much as 19 percent as panic swept across Russian financial markets after a surprise interest-rate increase failed to stem the run on the currency.
“The ruble sank beyond 80 per dollar, a record low, before rebounding…”
If you’d like to hear a good Elliott wave story, the ruble has one to tell.
Even if you don’t follow the currency, you know about the recent tensions between Russia and the West. It all began in February-March, when Russian troops (in unmarked uniforms) annexed the Crimea peninsula, a big piece of Ukrainian territory. The audacity of that move prompted the West to… well, scratch its head, at first. The question was, “What do we do?” On the one hand, a blatant land-grab in a potential future member of the European Union seemed intolerable. On the other hand… Russia has nukes.
So, the West settled on trying to pressure the Russians with economic sanctions. That, said the analysts, was the catalyst for the ruble’s downfall. In early October, when the dollar/ruble exchange rate first zoomed north of 40, The Wall Street Journal wrote:
“The dollar popped above 40 against the ruble for the first time, a move that follows months of pressure that has been building on the Russian currency since tensions flared between Russia and Ukraine in March.”
Note the date: March. That’s when the Russia-Ukraine-West conflict began in earnest.
And now, please read this forecast for USDRUB that the editor of our Currency Pro Service, Jim Martens, published for subscribers in January:
The specific Elliott wave pattern that helped us turn bullish on the dollar/bearish on the ruble two months before the Russia-Ukraine tensions began was an Elliott wave triangle. You can see it in the USDRUB chart above. It’s a wave pattern that most often appears in the 4th wave position of a 5-wave move. When a triangle ends, the price usually “thrusts” in the direction of the previous trend — higher, in this case.
That’s it. Our January forecast included no geopolitical “if, then” scenarios. No scrutinizing every news report. (There was no news to scrutinize yet!)
Each move you see on a price chart, up or down, is part of a pattern that reflects the collective psychology of market participants. That’s really what wave patterns help you track and forecast.
USDRUB was ready to rally in January. The market psychology was ready for a turn against the ruble, news or not.