In this review we would like to consider the “wheat against the ruble” personal composite instrument (PCI). It goes up on the chart with the rising price of wheat on the world market and weakening of the ruble against the US dollar. Grain price may rise due to weak forecasts of its crop in the European Union. The weakening of the ruble against the US dollar has been already observed for a few days after the announcement of the Russian authorities that the strong national currency could have a negative impact on the economy. Will the Wheat/RUB continue rising?

On Friday, ODA Group Agency reduced the forecast of wheat crop in the EU for this year to 30 million tons from 35 million tons expected earlier. In addition, the crop in France may be the lowest since 2003. The decrease of forecast is because of heavy rains. FranceAgriMer Agency downgraded the assessment of wheat crop in France with the quality of “good and excellent” to 42% from 49% a week earlier.

FranceAgriMer notes that currently only 17% of crops have been harvested, whereas 53% of crops were already harvested at the same time last year. Agritel Agency downgraded the forecast of wheat crop in Germany for this year to 26,03 million tons, which is 1.9% lower than the last year’s level. On Friday, Brent oil fell to 2-month low, which contributed to the weakening of the Russian currency. This week, Russian authorities expressed concern over the high rates of the ruble. Market participants interpreted this as “verbal intervention” and the Russian currency fell slightly. Note that next week the quarterly tax payment period will end in Russia and after that, the demand for the ruble may decrease.

On the daily chart Wheat/RUB: D1 has formed the year low on Wednesday, last week and then began to correct upwards. MACD indicator has formed the signal to buy. Parabolic indicator has not reversed up and its signal to sell may serve as an additional level of resistance. The Bollinger bands have widen which means high volatility.

RSI indicator approached 50 and formed a positive divergence. The bullish momentum may develop in case the PCI exceeds Parabolic signal and fractal high at 1,256. This level may serve as a point of entry. The initial stop-loss may be placed below the last fractal low, Parabolic signal and the year low at 1, 16. After opening the pending order we shall move the stop to the next fractal low following the Bollinger and Parabolic signals.

Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 1,16 without reaching the order at 1,256, we recommend cancelling the position: the market sustains internal changes which were not taken into account.