By Ron Harui
Jan. 12 (Bloomberg) -- The euro may extend gains to a one- month high of $1.4750 after it rose above so-called resistance at $1.4485, said Andrew Chaveriat, a technical analyst in New York at BNP Paribas SA, citing trading patterns.
Resistance at $1.4485 is the top of the range in which the euro traded between Dec. 22 and Jan. 8, Chaveriat said. The target of $1.4750 was calculated by adding the difference between that top and the $1.4220 bottom of the range to the $1.4485 level, according to Chaveriat.
“The euro has decisively broken out of its recent range, targeting a rise toward the range breakout target” of $1.4750, Chaveriat said in an e-mail to Bloomberg News yesterday. “It’ll be interesting to see how high this rebound goes this week.”
Europe’s single currency traded at $1.4491 as of 11 a.m. in Tokyo from $1.4513 in New York yesterday, when it climbed to $1.4557, the highest level since Dec. 16. The $1.4750 level was last seen on Dec. 11.
The euro’s weekly momentum indicator is also on the “cusp of a bullish crossover” rising from last week’s oversold reading, indicating scope to fuel a “multi-week” rebound, said Chaveriat. “This could see a larger rebound toward $1.4801 and, if crossed, $1.4950.”
The next so-called resistance levels are at $1.4570 and $1.4680, which represent 38.2 percent and 50 percent retracements, respectively, of the euro’s decline from the November high to the December low, Chaveriat said, referring to a series of numbers known as the Fibonacci sequence. Resistance is where there may be selling orders.
“A rise above $1.4680 would suggest we’re retracing the entire November-December decline -- opening the 61.8 percent retracement of that selloff at $1.4790 -- not far above $1.4750,” he said.
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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