We considered the symmetrical triangle pattern to be completed on Jan. 16, when RSX closed below resistance at the apex of the pattern.
Based on the pattern, we expect RSX to drop to a target price range of $10-$11 (as illustrated by the dark red bar in the image below).
The Russian economy has been hit hard by a trio of serious issues. First, the war (or threat thereof) in Ukraine has been a drain on confidence and led to the second issue of sanctions from Western Europe and the U.S. Finally, falling oil prices are a huge problem for an economy that is largely dependent on oil export revenue. Subsequently, Russian debt has been downgraded, the ruble has been incredibly unstable, and stocks are down significantly.
The Russian market has had a bit of a reprieve as oil prices stabilized recently and Russian stocks have been doing a little better. However, the Russian stock ETF has not been able to make any significant gains against record-level redemptions and another ratings downgrade is likely to appear before the end of January.
We like a new bearish position in RSX as a play on instability in Europe and the potential for further declines in energy. Recent positive momentum has pushed put prices down a little and makes this an ideal entry point for a downside breakout from the technical triangle you can see in the chart.
Buy to open the RSX March 15 Puts (RSX150320P00015000) for a maximum price of $1.45.
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