Nov. 20 (Bloomberg) -- The euro may fall to its weakest level since August, Brown Brothers Harriman & Co. said, citing an M-shaped trading pattern known as a double-top formation.
The 17-nation euro is trading near $1.28, where the neck line of the double top comprising the Sept. 17 high of $1.3172 and the Oct. 17 high of $1.3140 lies, said Marc Chandler, the global head of currency strategy at Brown Brothers in New York.
“The minimum objective of the pattern is around $1.2450, which is just beyond the 61.8% retracement of the euro’s Q3 rally,” Chandler wrote in an emailed-note yesterday, also citing a chart based on the Fibonacci sequence of numbers. He is “cautiously bearish,” Chandler said.
The euro fell 0.3 percent to $1.2782 as of 10:03 a.m. in Tokyo from the close yesterday in New York. The $1.2450 level was last seen on Aug. 22. The currency had advanced from a low of $1.2043 on July 24 to a high of $1.3172 on Sept. 17.
Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break above resistance, or below support, indicates it may move to the next level. Support refers to an areas where buy orders may clustered. Resistance is where there may be orders to sell.
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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