By Ron Harui
Jan. 26 (Bloomberg) -- The euro may fall to a seven-month low of $1.38 should it close below so-called support at $1.4118, said Pak Lai Ng, a technical analyst at Forecast Pte in Singapore, citing trading patterns.
Europe’s currency is likely to test the $1.4118 level in coming days because daily momentum charts such as the moving average convergence/divergence, or MACD, show a sell signal for the euro versus the dollar, Ng said. The support is a 38.2 percent retracement of the euro’s rise from its March low of $1.2457 to the November high of $1.5144, based on a series of numbers known as the Fibonacci sequence.
“The focus is still on the downside for the euro-dollar,” Ng said in an interview. “Momentum indicators are all on the negative side.”
The euro bought $1.4157 as of 9:15 a.m. in Tokyo from $1.4151 in New York yesterday. It dropped to $1.4029 on Jan. 21, the lowest level since July 30. The 16-nation currency has weakened 1.2 percent in January and is heading for a second monthly loss, its longest since February 2009.
The target of $1.38 represents a 50 percent retracement of the euro’s rally from the March low, Ng said. That level was last reached on June 16, according to data compiled by Bloomberg.
MACD charts can indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages based on 9-, 12- and 26-day periods. Fibonacci charts are based on the theory that securities tend to rise or fall by specific percentages after reaching a new high or low. A break below support or above resistance indicates a currency may move to the next level.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Support is a level where buy orders may be clustered, while resistance is where there may be sell orders.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net.
Posts
No comments:
Post a Comment