Russia’s stock market and Ruble currency has been in the headlines for much of last year. As the Russian stock market index lost some 50% of it’s value during the crisis, while still over 50% below it’s 2008 highs (now 66% below it’s 2008 highs in RSX).

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The chart above shows the weekly price action in the Market Vectors Russia ETF (RSX) since the year 2011 and highlights the high level of volatility in this market. In 2011, during the Eurozone crisis, RSX lost about 50% of its value or $20 points from high to low.

Price became range bound over the next couple of years while the retrace rallies became weaker and weaker, eventually a sign of things to come. Another bottom came in late 2014, about $20 points lower than the 2012 highs, matching the length of the prior decline and proved to be support.

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This chart highlights those retrace rallies in greater detail. The first came in late 2011 into early 2012 and it produced a $10 point rally into the midpoint of the bear market. The next retrace rally off the double bottom low in mid 2012 was only $8 points and the next two retrace rallies about $6.50 points. A signal that sellers remained in full control.

Support was eventually reached in late 2014 at $12.50 and has since risen back above $20. This sets up an interesting scenario going forward, as resistance lies here at $20 which coincides with a prior swing low and matches the length of the prior three retrace rallies.

The next resistance level lies at $23 which also coincides with the prior double bottom lows and would match the length of the first and biggest retrace rally in late 2011 into early 2012.

I believe that going forward, these levels will be key in determining if this current rally is just another retrace rally in an ongoing bear market, or the beginning of a new bull market.

A failure at resistance would setup the probability of heading down to, and probably taking out, the 2008 lows at $10.34. A break above $23 sets up the probability of rallying to at least $27.50 (midpoint of the 2011 highs to 2014 lows), $35 (break away gap in 2011 that was never tested) and $43 (2011 highs). This obviously take time to play out, it would not be one straight shot higher.

Investors looking to buy RSX need to know that 1) this should really be a long term investment (longer than 5 years) and 2) highly volatile (cheap can always get cheaper), size positions accordingly.