Euro to Test Its Strongest Level Since May Versus Yen: Technical Analysis
Japanese yen notes and Euro notes. Photographer: Haruyoshi Yamaguchi/ Bloomberg
The euro may advance about 4 percent against the yen after it breached a key price resistance level, according to Technical Alpha, a New-York based research company.
The 16-nation euro may rally to between 117 and 118.80 yen over the next two months after closing above 113.85 yesterday, James Stellakis, the company’s founder, wrote in an e-mailed report. The euro hasn’t traded stronger than 118.80 since May 11, according to Bloomberg data.
The close above 113.85 indicated “improving underlying demand for the cross,” Stellakis wrote. “Next resistance on the ichimoku chart comes in at the cloud top near 116.80 and 117.80.”
The euro traded at 113.96 yen as of 4:01 p.m. in London, from 114.24 yen yesterday. It strengthened earlier to 114.74 yen, the most since May 18.
A resistance level is an area where technical analysts anticipate orders to sell a security. An ichimoku chart analyzes the midpoints of historic highs and lows. A cloud is the area between the first and second leading span lines on the chart, and is used to show an area where buy or sell orders may be clustered.
In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index. Support is where buy orders may be grouped, and resistance is a level where sell orders may be gathered.
To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net
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