Euro May Decline to $1.5286 on Charts, Standard Chartered Says

By Ron Harui

July 21 (Bloomberg) -- The euro may decline to $1.5286 after its failure to hold gains above a so-called resistance level at $1.6000, said Callum Henderson, head of foreign- exchange strategy at Standard Chartered Plc in Singapore.

Resistance at $1.6000 represents the record high of $1.6038 reached on July 15 and the target of $1.5286 is the May 8 low, according to Standard Chartered. Resistance is where sell orders may be clustered.

``The inability of the euro to sustain gains above $1.60 is potentially bearish,'' Henderson wrote in a research report today, citing a so-called ``long-legged doji'' that appeared on the candle charts on July 15. This pattern signals indecision and typically occurs at the end of a prolonged trend.

Europe's single currency traded at $1.5866 at 8:45 a.m. in London from $1.5847 late in New York on July 18. It has fallen 1 percent from its all-time high on July 15.

The euro may also be forming a so-called ``double top,'' Henderson wrote. The double-top pattern, which consists of two successive peaks with a trough in the middle, suggests a currency may reverse its uptrend.

The first peak is the April 22 high of $1.6019 and the second peak is the July 15 high of $1.6038, while the trough is the May 8 low of $1.5285, based on Bloomberg data.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net