Yen Must Pass 99.75 Test Before Touching 100: Technical Analysis

The yen must pass a technical level to touch 100 per dollar for the first time in four years, Nomura Securities Co. said, citing trading patterns.

Key support for the yen lies at 99.75, the 50 percent retracement on the Fibonacci chart from the 2007 low on June 22 of 124.14 to the all-time high of 75.35 reached on Oct. 31, 2011. Fibonacci analysis theorizes that prices rise or fall by certain percentages after reaching a new high or low.

A break past 99.75 would open up 100 and beyond, according to Yunosuke Ikeda, head of foreign-exchange strategy at Nomura Securities in Tokyo. It was at 98.39 as of 12:16 p.m. in Tokyo.

“From there, there won’t be any meaningful chart targets,” Ikeda said today in a telephone interview. “By significantly breaking that level, investors tend to believe the yen has entered a new phase, as opposed to just a recovery from irrational levels like 75 and 80.”

The last time the yen traded at 100 was April 14, 2009.

The Japanese currency has weakened more than 20 percent against the dollar over the past six months as Prime Minister Shinzo Abe’s party swept to power on a campaign of expanded economic stimulus, and he chose Haruhiko Kuroda to lead a monetary easing push at the Bank of Japan. (8301)

In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index. Support refers to an area on a chart where analysts anticipate orders to buy may be clustered.

To contact the reporter on this story: Kevin Buckland in Tokyo at kbuckland1@bloomberg.net

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

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