By Ron Harui
Sept. 22 (Bloomberg) -- The euro may extend its rally to a five-week high of 137.50 yen, Citigroup Inc. said, citing trading patterns.
Europe’s currency is likely to gain versus the yen after rising above the “neckline” of a “double-bottom” pattern, Citigroup analysts Tom Fitzpatrick in New York and Shyam Devani in London wrote in a research note yesterday
“The daily chart shows the rally through the double bottom neckline at 134.41,” Fitzpatrick, chief technical analyst at Citigroup, and Devani said in the note. “A test of 137.50 is expected.”
The euro traded at 135.01 yen as of 12:50 p.m. in Tokyo from 134.96 yen in New York yesterday, when it rose to 135.48 yen, the highest level since Aug. 25. The 137.50 level would be the strongest since Aug. 13. The currency has risen 1.1 percent in September, heading for its first monthly gain since June.
A double bottom occurs when a currency makes two consecutive troughs of about the same depth, and indicates it may rebound. The neckline passes through the highest point of the double bottom.
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
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