By Candice Zachariahs and Ron Harui
Dec. 9 (Bloomberg) -- The Dollar Index may extend gains to a three-month high of 77.69 after rising above resistance at the lower end of an ichimoku cloud, said Barclays Capital, citing trading patterns.
The index, which is used to track the dollar against the currencies of six major U.S. trading partners, posted yesterday its first close since April above 76.05, the base of the cloud according to Bloomberg data. The cloud is the area between the first and second leading span lines on the chart and is used to show an area where buy orders may be clustered.
“A potential change in trend is developing,” MacNeil Curry, chief North American technical strategist in New York at Barclays Capital, said in a telephone interview. Yesterday’s close “indicates that the trend is likely to extend and that we’re likely to see continued strength in the Dollar Index.”
The Dollar Index traded at 76.279 as of 7:15 a.m. in London from 76.198 in New York yesterday. It advanced 1.2 percent in the five days ended Dec. 4, the biggest weekly gain since June 5.
The index may rise to as high as 77.69, the low point set on Dec. 18, 2008, Barclays Capital analysts including Curry wrote in a note to clients yesterday. Support typically becomes resistance when it is broken. The 77.69 level would be the highest since Sept. 8.
An ichimoku chart analyzes the midpoints of historic highs and lows. Resistance is a level at which sell orders may be clustered and support is where there may be buy orders.
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: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.
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