Euro May Advance From Two-Month Low: Technical Analysis

The euro may extend its rally from a two-month low against the yen, according to Gaitame.com Research Institute Ltd., citing trading patterns.

The 17-nation currency formed three-consecutive white bars on its candlestick chart and exceeded the colored bar formed on April 13, signaling “the euro is bottoming out,” said Takuya Kawabata, a researcher at Tokyo-based Gaitame.com. White bars show that the currency’s closing price is higher than the opening level, while the colored ones indicate the opposite.

The euro may be headed for a high reached on Feb. 27, a most that would form a so-called head-and-shoulders pattern with a March 21 high being the head, said Kawabata, whose company is a unit of Japan’s largest foreign-exchange margin firm. A head- and-shoulders pattern appears when a currency makes three consecutive peaks, with the middle the highest.

The euro was little changed 107.25 yen as of 10:45 a.m. in Tokyo after touching 104.63 on April 16, the lowest since Feb. 20. The common currency reached 109.93 on Feb. 27 and advanced to as high as 111.44 on March 21, a level unseen since October.

In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.

To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Hiroko Komiya in Tokyo at hkomiya1@bloomberg.net.

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.