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Singapore Dollar May Gain 1.3% Against Euro: Technical Analysis

Aug. 19 (Bloomberg) -- Singapore’s dollar may rise 1.3 percent against the euro in a week after the currency broke through a key technical level, according to Tokyo-based Mitsubishi UFJ Morgan Stanley Securities Co.

The Asian currency strengthened beyond 0.5756 euro, the upper end of the so-called ichimoku cloud, said Minoru Shioiri, head of foreign-exchange trading at the unit of Japan’s largest financial group by market value. It may climb to 0.5792 in a day or two and reach 0.5846 in a week, he said in an interview today, citing a series of numbers known as the Fibonacci sequence.

“Putting all the fundamental factors aside, some charts indicate there’s more room for the Singapore dollar to strengthen against the euro,” Tokyo-based Shioiri said.

The city-state’s dollar climbed 0.5 percent to 0.5772 euro as of 12:17 p.m. in Singapore, appreciating for a third day, according to data compiled by Bloomberg. It earlier touched a six-week high of 0.5781.

An exchange rate of 0.5792 would be a 61.8 percent recovery of the Singapore dollar’s decline to a three-month low of 0.5564 reached on Aug. 6 from a June 7 high of 0.5933, the strongest level since July 2002, according to the Fibonacci chart. A rate of 0.5846 would be a 76.4 percent retracement on the same chart.

Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. Other levels are 23.6 percent, 38.2 percent and 100 percent.

An ichimoku chart analyzes the midpoints of historic highs and lows. The cloud is the area between the first and second leading-span lines on the chart and is used to show areas where buy or sell orders may be clustered.

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 reporters on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net;

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

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