April 7 (Bloomberg) -- The dollar’s advance against the yen has slowed as it nears resistance indicated by ichimoku chart analysis, BNP Paribas SA said.
“Dollar-yen has stalled ahead of the bottom of the weekly ichimoku cloud at 85.75,” Robert Ryan, a currency strategist at BNP Paribas in Singapore, wrote in an e-mailed report today. “Momentum for a higher dollar-yen may be waning.”
The dollar weakened 0.6 percent to 84.98 yen as of 11:45 a.m. in London. It last reached 85.75 yen on Sept. 21. The U.S. currency has rallied from a 76.25 yen postwar low on March 17.
“Today’s moves are likely to be capped by the 85.75 level,” Ryan said by phone. “While we expect further yen weakness over the coming weeks, there is unlikely to be enough momentum to clear the top of the weekly cloud at 87.94.”
Ichimoku charts are used to predict a currency’s direction by analyzing the midpoints of historical highs and lows. The conversion line plots the sum of the highest high and lowest low over the last nine trading days. The baseline is the same calculation over the past 26 days.
The cloud refers to the area between the first and second leading span lines on the chart and is used to show an area where buy 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.
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