Breaking News

Tweet TWEET

Pound May Drop 2.4% on Support Breach: Technical Analysis

The pound may drop 2.4 percent against the dollar after breaking through a key level of so- called support, Credit Suisse Group AG said, citing technical indicators.

The British currency is headed toward $1.4856, the 61.8 percent Fibonacci retracement of the currency’s advance between January and August 2009, after breaching $1.5274, the 50 percent retracement of that move, Cilline Bain, a London-based technical analyst at Credit Suisse, wrote today in a client note.

“We will continue to slide lower,” he said, confirming the report. “The next significant target is $1.4856.”

The currency tested the $1.5274 support level three times in 2011 and 2012, before rallying again, Bain said.

The pound fell 0.1 percent to $1.5224 at 10:17 a.m. London time after sliding to $1.5132, the lowest since July 21, 2010.

Support refers to an area on a chart where buy orders may be clustered. Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low.

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: David Goodman in London at dgoodman28@bloomberg.net

To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

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.