Dec. 11 (Bloomberg) -- The euro may drop toward its lowest level in almost four weeks versus the yen, Bank of America Merrill Lynch said, citing trading patterns.
The euro’s weekly candlestick chart against the yen indicates its recent advance is “stalling,” according to MacNeil Curry, the bank’s New York-based head of foreign-exchange and interest-rates technical strategy. The 17-nation currency’s relative strength index rose to 74 on Dec. 5, data compiled by Bloomberg show, above the 70 level that some traders see as a sign an asset is about to change direction.
In the long term, euro-yen is turning “from bearish to bullish,” Curry wrote in a report yesterday. “But for now the risk is for a correction lower to 103.00/101.68.”
Europe’s shared currency added 0.1 percent to 106.64 yen as of 9:35 a.m. in Tokyo after climbing to 107.96 on Dec. 5, the highest since April 20. It last touched 101.68 on Nov. 14, when it fell to as low as 100.83.
Candlesticks consist of a body, which is black or white, and upper and lower wicks. A wick shows the highest or lowest price. If a currency’s close is lower than it’s open, the body is black.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, currency or index.
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