Euro May Rise to One-Month High on Retracement Breach: Technical Analysis
Euro May Rise to One-Month High on Retracement Breach
Hannelore Foerster/Bloomberg
Europe’s currency traded at $1.2874 at 7:19 a.m. in Tokyo from $1.2876 in New York yesterday, when it rose to $1.2919, the highest level since Aug. 18.
Europe’s currency traded at $1.2874 at 7:19 a.m. in Tokyo from $1.2876 in New York yesterday, when it rose to $1.2919, the highest level since Aug. 18. Photographer: Hannelore Foerster/Bloomberg
Sept. 7 (Bloomberg) -- Axel Merk, president and chief investment officer of Merk Investments LLC, talks with Bloomberg's Julie Hyman about the outlook for the euro, Europe's sovereign-debt crisis and the European Union's bank stress tests and financial regulation. (Source: Bloomberg)
Sept. 6 (Bloomberg) -- Simon Derrick, chief currency strategist in London for Bank of New York Mellon Corp., talks about foreign exchange including the outlook for the euro, the pound and the dollar. He speaks with Andrea Catherwood on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Sept. 6 (Bloomberg) -- Hugo Brady, a senior research fellow at the Centre for European Reform, talks about the outlook for the euro zone. He speaks with Andrea Catherwood on Bloomberg Television's "The Pulse." (Source: Bloomberg)
The euro may rise to a one-month high against the dollar after climbing above major resistance levels at $1.2839 and $1.2873, according to Pak Lai Ng, a technical analyst at Forecast Pte, citing trading patterns.
The $1.2839 level is the 50-day moving average and $1.2873 is a 38.2 percent retracement of the currency’s fall from the Aug. 6 high of $1.3334 to the Aug. 24 low of $1.2588, based on a series of numbers known as the Fibonacci sequence, Ng said. The euro may strengthen toward the Aug. 6 high should the currency extend its rally beyond more resistance levels including the Aug. 18 high of $1.2923, he said.
“The euro is starting to push higher,” Singapore-based Ng said in an interview. “All the indicators are turning up. It’s possible” that the currency will head toward $1.3334, he said.
Europe’s currency traded at $1.2874 at 7:19 a.m. in Tokyo from $1.2876 in New York yesterday, when it rose to $1.2919, the highest level since Aug. 18.
Other major resistance levels include $1.2961, the 50 percent retracement of the August slide, and $1.3049, the 61.8 percent retracement, Ng said. Resistance is an area where sell orders may be clustered.
Daily momentum indicators such as the moving average convergence/divergence, or MACD, also signal Europe’s single currency may gain versus the dollar, Ng said.
The euro’s MACD rose above its so-called signal line for the first time in three months on Sept. 3, based on data compiled by Bloomberg. The MACD was minus 0.0009 today, compared with minus 0.0023 for the signal line.
The MACD is calculated by subtracting the 26-day exponential moving average, or EMA, from the 12-day EMA. A nine- day EMA of the MACD, called the signal line, is plotted on top of the MACD, functioning as a trigger for buy and sell signals.
In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index. Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net
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