Euro May Decline to $1.4390 on Technical Chart, Okasan Says

By Stanley White

Sept. 29 (Bloomberg) -- Technical analysis shows the euro may fall to $1.4390 this week, said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo.

The 15-nation currency is set to decline as its stochastic chart is showing a sell signal, Soma said. This suggests the euro will break below first support at its 30-day moving average of $1.4491, he said. Second support at $1.4390 is a 23.6 percent retracement on the euro's decline from a record high of $1.6038 on July 15 to a one-year low of $1.3882 on Sept. 11, according to a series of numbers known as the Fibonacci sequence.

``There's a very good chance for the euro to fall,'' Soma said. ``The euro has simply run out of steam and will take out support levels in a slow grind lower.''

The euro fell to $1.4498 at 11:12 a.m. in Tokyo from $1.4614 late in New York on Sept. 26, paring last week's gain of 1 percent.

Stochastic charts are used to indicate momentum by measuring the price of a security compared with its highs and lows. Support is where buy orders may be clustered. Other Fibonacci levels are 38.2 percent, 50 percent, 61.8 percent and 76.4 percent. A break of one suggests a security may move to the next, while a failure suggests a move will stall.

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

To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net