Australian Dollar Poised to Fall, BofA Says: Technical Analysis
The two-month rally by Australia’s dollar against its U.S. counterpart may end as the Aussie approaches the limits of its trading range over the past year, according to Bank of America Corp.
The Australian currency may top out between $1.0584 and $1.0857 to the dollar, MacNeil Curry, head of foreign-exchange and interest-rates technical strategy in New York at Bank of America Merrill Lynch, wrote today in a client note. The appreciation would “ideally” climax at $1.0584 to $1.0697, corresponding to a 78.6 percent retracement of the decline from February to June and would contact the currency pair’s range resistance, he wrote.
“We’ve been in a range for the past year, and we’re coming to the high end of that range,” Curry said in a telephone interview. “It’s not so much a line in the sand as a trading range.”
If the currency breaches the $1.0436 level, it may fall to 98 U.S. cents to 96.29 cents, he said.
“We’ve gotten to the range high, now we want to look go to the range low,” Curry said.
The Aussie depreciated 0.1 percent to $1.0570 today in New York. The currency gained against all of its 16 most-traded peers over the past year.
Resistance is an area on a chart where 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.
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