Australian Dollar `Targets' 85.10 U.S. Cents, Goldman Says

By Ron Harui

Aug. 11 (Bloomberg) -- Australia's dollar now ``targets'' the January 2008 low of 85.10 U.S. cents after it fell below the so-called support between 89.55 and 90.25, said Kevin Edgeley, a technical analyst at Goldman Sachs Group Inc.

Support between 89.55 and 90.25 consists of the March 21 low of 89.55, and a 61.8 percent retracement of the Australian dollar's advance to the July 16 high of 98.49 cents from the Jan. 22 low of 85.13 cents, based on a series of numbers known as the Fibonacci sequence. Support is a level where buy orders may be clustered.

``We look for full reversal to 85.10 as the next target, although we are watching for any signs of near-term correction, with the market short-term oversold,'' London-based Edgeley wrote in a research note yesterday.

The Australian dollar declined 0.3 percent to 88.62 U.S. cents at 2:40 p.m. in Sydney from 88.85 cents late in New York on Aug. 8. It reached 88.37 cents, the weakest since Jan. 31.

The daily, weekly and monthly stochastic oscillator charts are ``all pointing lower'' and Goldman's so-called Trend Strength indicator is still rising to reinforce the ``bearish'' bias of the Australian dollar, Edgeley wrote.

A stochastic oscillator chart measures the closing price of a security relative to its highs and lows during a particular period to try to predict whether it will rise or fall.

Fibonacci analysis is a mathematical formula based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break of one indicates a currency may move to the next. A failure suggests the trend may stall. Other Fibonacci points include 76.4 percent.

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