The pound is poised to decline to the lowest in four months against the Australian dollar should it close below A$1.5074, Royal Bank of Canada said, citing trading patterns.
A breach of A$1.5074, will add “bearish price momentum,” toward the 76.4 percent Fibonacci retracement of the its advance from the February low to the May high, according to George Davis, chief technical analyst for fixed-income and currency strategy in Toronto at the bank’s RBC Dominion Securities unit.
The retracement level is A$1.4941, based on the low of A$1.4556 reached on Feb. 15 and a high of A$1.6186 on May 23, according to data compiled by Bloomberg. The level was last seen on March 19.
Sterling this week fell below the 61.8 percent Fibonacci retracement against the Aussie and the currency is “immersed in a bearish backdrop,” Davis wrote in a note yesterday. “A daily close below the early July low at 1.5074 would add to bearish price momentum, targeting the 76.4 percent retracement.”
The pound fetched A$1.5097 as of 6:50 a.m. in London from A$1.5079 yesterday.
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 new high or low.
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