KAPOW! Russian Ruble Breakdown

Summary

In this video, monetary economist Mark Berard analyzes the technical breakdown of the Russian Ruble, explaining how its collapse signals underlying issues in Russia's economy. He discusses stage four technical analysis, including the significance of the death cross (when the 50-day moving average crosses below the 200-day moving average) and the Ruble's failure to maintain key support levels. Berard emphasizes that this breakdown points to inflation, a shrinking economy, and a decline in public confidence. He also explores the potential geopolitical and microeconomic implications, predicting that Russia's internal economic collapse could eventually lead to major political unrest.

Takeaways

• 😀 The Russian Ruble is experiencing a significant breakdown, entering a 'stage four' technical phase of devaluation.
• 😀 A 'stage four' breakdown indicates a clear bearish trend where an asset, in this case, the Ruble, is struggling to regain support after falling below key technical levels.
• 😀 The 200-day moving average is a key indicator in technical analysis. The Ruble’s current state is marked by a 'death cross,' where the 50-day moving average crosses below the 200-day moving average, signaling continued decline.
• 😀 Technical analysis reveals that the Ruble’s value has broken through major support levels, which means Russia may be facing unseen internal economic pressures.
• 😀 The collapse of the Ruble is causing hyperinflation, particularly in food prices, and severely affecting disposable income in Russia, making it harder for people to afford basic necessities.
• 😀 As the Ruble declines, Russians may turn to cryptocurrencies as a way to preserve value, though the correlation between the Ruble's collapse and crypto’s rise is not perfectly clear.
• 😀 The Ruble’s decline points to a loss of international confidence in the currency, leading Russia to barter oil and other resources with countries like North Korea and India to bypass global financial systems.
• 😀 The breakdown of the Ruble is part of a larger trend of Russia's diminishing ability to raise capital, a critical factor in its economic decline and inability to sustain long-term growth.
• 😀 Historical context suggests that Russia has gone through similar economic collapses in the past, and such breakdowns often lead to social and political upheavals.
• 😀 The Ruble’s decline could spark a broader collapse in Russian society, potentially leading to significant changes in Russia’s political structure, as has occurred in past revolutions.
• 😀 Watching the Ruble’s movement and technical signals is crucial, as it offers more reliable insight into Russia’s economic situation than the mainstream news.

Q & A

What is the current state of the Russian Ruble according to Mark Berard?

The Russian Ruble is in a 'stage four' breakdown, meaning it is in a strong downtrend, currently trading below the 200-day moving average, which is a strong signal to sell.

What does 'stage four' analysis mean in technical terms?

Stage four refers to when an asset, such as a currency, falls below the 200-day moving average, signaling that the asset is in a decline. It is considered a sell signal, indicating a prolonged downtrend.

What is the 'death cross' mentioned in the video?

The 'death cross' occurs when the 50-day moving average crosses below the 200-day moving average, confirming a bearish trend. It is often seen as a strong signal that an asset will continue to decline.

Why does Mark Berard emphasize the importance of technical analysis over news in forex trading?

Berard believes that the news is already reflected in the price of an asset before it reaches the public. Therefore, by observing the technicals, traders can get an early signal of market shifts, rather than relying on delayed news.

What is the significance of the Ruble breaking below the 'support of a penny'?

The Ruble's decline below a penny (0.01) is a critical level of support. Once it broke through this barrier, it signaled a major breakdown in the currency's value and the possibility of further deterioration.

What does Mark Berard mean by 'confirmation' in technical analysis?

Confirmation refers to additional technical indicators, such as high trading volume or other signals like the Relative Strength Index (RSI), that validate the breakdown of an asset and suggest the trend will continue.

What role does trust play in the value of a currency, according to Berard?

Trust is the ultimate foundation of any currency's value. A loss of confidence in the Ruble, as seen in its breakdown, signals a broader loss of trust in Russia's economy and financial stability.

How does the decline of the Ruble relate to inflation in Russia?

The Ruble’s decline is a major contributor to rising inflation in Russia, particularly food inflation, as it erodes the purchasing power of ordinary Russians, decreasing their disposable income and making basic necessities more expensive.

What impact does the Ruble’s decline have on Russian citizens' ability to pay bills?

As the Ruble continues to lose value, Russians are increasingly unable to pay their bills for essential goods like food, rent, and utilities. This creates a dire economic situation, especially for pensioners and low-income citizens.

What does Mark Berard suggest is happening behind the scenes in Russia due to the Ruble's breakdown?

Berard suggests that behind the scenes, Russia may be engaging in bartering with countries like North Korea and India to circumvent the Ruble's decline and maintain economic activity, as the Ruble itself loses value and trust.