By Yasuhiko Seki and Hiroko Komiya
Oct. 20 (Bloomberg) -- The dollar may extend its advance against Japan’s currency to reach the strongest level in a month, Bank of Tokyo-Mitsubishi UFJ Ltd. said, citing trading patterns.
The greenback rose above its four-week moving average last week, signaling the U.S. currency will make further headway, said Masashi Hashimoto, a senior analyst in Tokyo at the unit of Japan’s biggest publicly traded bank. Momentum indicators, such as the stochastic oscillator, also show buy signals, he said.
“It may be interesting to follow the short-term change in the technical trend and test the upside of the dollar,” Hashimoto said. “In that case, the target is mid-92 yen, or the highest level since September.”
The dollar traded at 90.71 yen as of 7:28 a.m. in Tokyo, from 90.55 yen yesterday in New York. The dollar reached 92.53 yen on Sept. 21. The currency’s four-week moving average stood at 90.03 yen at the end of last week.
“While near-term prospects for the dollar have improved, the mid- and long-term outlooks are still negative,” Hashimoto said. “The currency’s gains will slow as it moves toward the 52-week moving average of 94.54 yen, which holds the key to ascertaining the long-term outlook.”
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. 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.
To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net; Hiroko Komiya in Tokyo at Hkomiya1@bloomberg.net
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