The U.S. dollar may rally 1.5 percent within two weeks after it touched a seven-month low versus the yen, Forecast Pte said, citing trading patterns.
A “long lower shadow” formed on the so-called candle chart yesterday suggests sellers forced the greenback down before buyers pushed it back up toward the opening level by the end of the day, according to Pak Lai Ng, a Singapore-based technical analyst at Forecast.
“We see a long tail at the bottom of the candle stick chart,” Ng said. “It would suggest that a dollar rebound is likely from here.”
The dollar fetched 77.65 yen at 1:21 p.m. in Tokyo from 77.49 yesterday, when it touched 77.13, the lowest since Feb. 9.
Should the greenback rise back above the past support level of 78 yen, it could advance to 78.84 within two weeks, according to Ng. That would be the highest since Sept. 7.
“The dollar needs to regain the 78 level to confirm a reversal” of its downward trend, Ng said. “Yesterday we saw quite a sharp drop in the dollar-yen and further downside is quite limited from here.”
In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.