Nov. 29 (Bloomberg) -- The yen may reverse a weakening trend against its U.S. counterpart if it appreciates beyond its nine-day high, according to JPMorgan Chase & Co., citing technical indicators.
The Japanese currency fell 3.9 percent against the dollar over seven days beginning Nov. 14 before the greenback failed to break a key resistance level from 82.50 to 83.20, Niall O’Connor, a New York-based technical analyst at JPMorgan, wrote yesterday in a note to clients. If the dollar depreciates versus the yen through a support level from 81.40 to 81.70, it will test a breakout area at 80.60. That would be the yen’s highest level since Nov. 15.
“That would imply that there’s a shift going on for yen in general,” Niall O’Connor, a New York-based technical analyst with JPMorgan Chase & Co., said in a telephone interview. “It would suggest that the underperformance we’ve seen over the last few weeks is likely over and we’d likely see the yen strengthen against the dollar if we break those levels.”
Japan’s tender gained 0.1 percent to 82.08 per dollar yesterday in New York after earlier reaching 81.69, its highest level since Nov. 21.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, currency or index. Resistance refers to an area on a chart where sell orders may be gathered, while support is an area where there may be buy orders.
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