By Yoshiaki Nohara and Shigeki Nozawa
Oct. 9 (Bloomberg) -- The euro is poised to decline to a three-month low against the yen, said Bank of Tokyo Mitsubishi UFJ Ltd., citing trading patterns.
The European currency’s five- and 21-day moving averages are both heading down, signaling the euro is likely to keep weakening, said Masashi Hashimoto, a senior analyst in Tokyo at the unit of Japan’s biggest publicly traded bank. Daily momentum indicators such as moving average convergence/divergence also show sell signals, he said.
“The euro is shifting to a downtrend,” Hashimoto said in an interview yesterday. “If it falls through the 200-day moving average, that would be a big turning point in terms of trend.”
The euro traded at 130.74 yen as of 7:19 a.m. in Tokyo, down from a two-month high of 138.72 yen on Aug. 7.
The currency is set to weaken toward the 200-day moving average, currently at 129.73 yen, and if it fails to hold at that level it would then fall toward 127.02 yen, which represents its low of July 8, Hashimoto said. The euro has remained above the 200-day moving average since May.
A failure to remain above 127.02, would then open up the possibility of a decline to its April 28 level of 124.39, Hashimoto said.
MACD charts can indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages based on nine-, 12- and 26-day 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 reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Shigeki Nozawa in Tokyo at Snozawa1@bloomberg.net.
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