Dollar May Extend Decline to 107.22 Against Yen, Forecast Says

By Ron Harui

Aug. 22 (Bloomberg) -- The dollar may extend its decline to 107.22 yen next week, said Pak Lai Ng, a technical analyst at Forecast Pte Ltd. in Singapore, citing charts used to predict price movements.

Support at 107.22 yen is a 50 percent retracement of the U.S. currency's rise from the July 16 low of 103.77 yen to the Aug. 15 high of 110.66 yen, based on a series of numbers known as the Fibonacci sequence. The dollar is likely to weaken as its daily momentum indicators such as the moving average convergence- divergence chart are showing sell signals, Ng said. Support is where buy orders may be clustered.

``Dollar-yen is on the way down,'' Ng said. ``All of the indicators have turned down. We are targeting 107.22 yen.''

The dollar rose to 108.90 yen as of 3:36 p.m. in Tokyo from 108.43 yen late in New York yesterday, when it reached 108.14, the lowest since Aug. 5. The currency has fallen 1.6 percent since touching 110.66 yen on Aug. 15, the strongest since Jan. 2.

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 a trend may stall. Other Fibonacci points include 61.8 percent and 76.4 percent.

MACD charts indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages over different periods.

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