South Korea’s won may decline 2.8 percent against the yen over the next two weeks as a technical chart signaled investors should buy the Japanese currency, according to Mitsubishi UFJ Securities Co.
The yen strengthened above a parabolic stop and reversal point yesterday, a level that signals traders should close bets that the won will add to its 3.9 percent advance this year. The parabolic system is similar to a moving average and is shown as a series of dots above and below the price.
Korea’s currency also closed yesterday below its 20-day moving average against the yen, another bearish signal for the won, said Minoru Shioiri, chief manager of foreign-exchange trading in Tokyo at Mitsubishi UFJ.
“Looking at parabolic systems and moving averages, the momentum is lost for the won’s gain,” Shioiri said. “The won may see some downward correction for the time being.”
The won may weaken to 12.38589 against the yen in the next two weeks, Shioiri said. It gained 0.5 percent to 12.04244 as of 1:22 p.m. in Seoul, according to data compiled by Bloomberg. The Japanese currency last traded as high as 12.38589 on March 25.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.