The Australian dollar may halt a recent drop versus the U.S. currency after finding so-called support toward $1.0225, JPMorgan Chase and Co. said citing trading patterns.
The area from $1.0255 to $1.0225 contains the 38.2 percent Fibonacci retracement of the currency’s advance from last year’s low of 95.82 U.S. cents to $1.0625 on Sept. 14. It also includes the 76.4 percent retracement from the October low of $1.0149, Niall O’Connor, a technical analyst at JPMorgan, wrote today in a note to clients.
“We continue to see risk of a short-term reprieve to the recent weakness,” he wrote. “We continue to see key resistance at $1.0370/$1.0460 levels with upside breaks confirming a deeper retracement.” Resistance refers to an area on a chart where orders to sell may be clustered.
The Australian dollar traded at $1.0269 as of 1:23 p.m. in Sydney after yesterday dropping 0.6 percent to $1.0256. It earlier touched $1.0249, the lease since Oct. 23, and has weakened 1.5 percent this month.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
Fibonacci analysis, based on the work of 13th century mathematician Leonardo of Pisa, known as Fibonacci, is founded on the theory that prices rise or fall by certain percentages after reaching a new high or low.
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