Pound at $1.5480 May Signal Further Gains, Mizuho Says: Technical Analysis

Investors should buy the British pound should it rise to $1.5480 as trading patterns suggest the currency will appreciate further, according to Mizuho Corporate Bank Ltd.

The pound may rise to $1.56 and then $1.57, the bank said in an e-mailed note today. Investors should exit the investment if the currency falls below $1.53 to cut losses, it said.

“The weekly Ichimoku cloud is very thin, and moving averages suggest a long position,” Nicole Elliott, a senior technical analyst in London, wrote in the note. The pound “is trying to put in a new interim low, and should be helped by the daily cloud which rises steeply again this week.”

The pound fell 0.6 percent to $1.5367 as of 1:50 p.m. in London. The currency has slipped 5 percent against the dollar this year.

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 and prices to forecast changes in a security, commodity, currency or index.

To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net

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