Russian Stock Rally to Record May Still Have More Room to Go

  • RSI, MACD, Fibonacci technical indicators show room for gains
  • Recovery in oil prices powers stock benchmark past 2,000 mark

Russia’s benchmark Micex Index may still have room for more gains even after rallying almost 25 percent from this year’s low on Jan. 15 as oil prices recovered, technical indicators show.

With Friday’s record closing high, its relative strength index is comfortably below the overbought mark, and its moving average convergence-divergence line is verging on a bullish signal. The equity benchmark also has broken through a key technical resistance level.

The Micex’s RSI stands at 64, comfortably short of that velocity measure’s oversold demarcation of 70. This indicator issues a sell signal only after it breaches 70 and then falls below that line again, so the rally may have some momentum left.

While the RSI suggests that a bearish move isn’t in the works, the MACD momentum indicator is a hair away from sending a buy signal.

This analysis can presage a change in direction. The benchmark issued a bearish signal early last week as the index declined for three days straight, its longest losing streak in six weeks: The MACD, or short-term moving average line, crossed below the so-called signal line, a moving average of the MACD. But that may have been a head fake, because the rally resumed, and it’s now poised to do just the opposite, with the MACD heading north toward the signal line in a display of renewed upward momentum.

The benchmark last week also made a clean break above the key Fibonacci resistance level that represents a 100 percent recovery from its October 2008 low to its prior all-time high the previous December, four months after it started testing that mark. On Friday, it crossed another big barrier when it topped the 2,000 mark for the first time.

The next key Fibonacci resistance level, the 123.6 percent line, is 16 percent above Friday’s close of 2,003.77.