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UFS Investment Company - Technical Analysis, Daily, Oct 16, 2012.

For overall understanding of the MICEX index dynamics we present a large-scale chart. The index had been demonstrating confident growth since the second half-year 2008, starting from 493.62 and reaching 1865.25 points in April 2011 (+1371.63 points, or +277.87%). It was followed by a flat correction (for that reason correctional decline did not surpass 50% Fibonacci retracement from the previous growth).

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Chart 1 shows the mentioned flat correction that is continuing to form at the moment. The index is currently establishing a correctional decline AC[yen]-BC[yen]-CC[yen] within an upward wave B. AC[yen]-BC[yen]-CC[yen] correction proved somewhat longer than we estimated and surpassed the corridor that we marked with blue parallel broken lines, and expected a 100-day moving average to be a support level. Yet currency market situation and euro growth phase (dollar weakening) expected to start today indicate that the index might stop declining and start to go up. Wave B of the flat correction is developed as a zigzag. If our expectations are right and the second growth phase is now starting in this wave (growth phases in zigzag are mostly equal), the target of wave B can be expected at 1730 points. Afterwards a descending wave C will start to form within flat correction as a five-wave movement and in our view will reach the key level of 1560 points. Then flat correction will be completed. It will be followed by a large-scale growth wave, which will be smaller than the first one, as flat correction follows the first wave not the third one as usual (flat correction always follows the longest wave of a five-wave impulse). The target of the next growth phase stands at 2250 points.

In our view, Brent has completed the flat correction in the long term as follows from chart 3. We think Brent has now started to form a new growth phase with the target at $130.

The currency pair EUR/USD has completed flat correction Co wave #2 by this morning and is now going to move up within wave #3. The growth target of the latter is 1.3100.

Estimated dynamics of EUR/USD is represented in charts 4 and 5.

At the moment gold is forming the upward wave IAE of A-B-C flat correction. This correction was preceded by an almost three-year growth phase. Logically enough the growth compensation period will presumably take about 1.5 years and, according to our estimates, will be completed in Q1 2013. This phase will be followed by the next upward wave. The current wave IAE within correction movement goes up with a probable target at $1880. It might be followed by wave Ii with the target of $1780. Then, in our view, the flat correction will be completed and followed by another growth phase.

USD/RUB is now forming the correctional wave {2}, wherein it will decline today to 30.85Co30.95.

Expected USD/RUB dynamics in the medium term is outlined in chart 7.

S&P 500 Index has completed the correctional wave 2 and started to form an ascending wave 3. Today we expect the index to range between 1440Co1450 points.


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Publication:Russian Banks and Brokers Reports
Date:Oct 16, 2012
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