Euro May Advance to April High on Ichimoku: Technical Analysis

The euro may climb to the highest against the yen since April as the currency’s ichimoku chart sends “three buying signals,” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd.

The daily chart’s conversion line, which indicates a near-term direction, is above the base line, while the euro is trading higher than the so-called cloud, said Tokyo-based Ishikawa. As the lagging span is above the trading range of the 17-nation euro, these are seen as the three signals to buy the currency, he said.

The euro may climb toward 109 yen next year, which is close to the 50 percent retracement level of 108.72 between the high of 123.33 on April 11 last year and July 24 low of 94.12, Ishikawa said. It last reached that level on April 4.

The common currency fell 0.4 percent to 105.93 as of 10:44 a.m. in Tokyo.

Ichimoku analysis is used to predict a currency’s direction through analyzing the midpoints of historical highs and lows. 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 to forecast changes in a security, commodity, currency or index.

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