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Japan Yields May Rise to 0.875% on Fibonacci: Technical Analysis

Dec. 26 (Bloomberg) -- Yields on Japan’s 10-year government bonds may rise to 0.875 percent by the end of March, the highest since June, according to Sumitomo Mitsui Banking Corp., which cited trading patterns.

The benchmark rate reached a 2012 high of 1.06 percent on March 15, and declined to 0.685 percent on Dec. 6, the lowest level this year. Yesterday’s close was 0.765 percent, according to Japan Bond Trading Co., the nation’s largest inter-dealer debt broker. On Fibonacci charts, 0.872 percent is the 50 percent retracement of the decline from the March high to the low in December.

Yields rose to 0.88 percent on June 8, and hit 0.86 percent on Aug. 16 and 17.

“The rates will test these levels again in the first quarter, and may rise as high as 1.25 percent in the latter half of the next year,” said Daisuke Uno, chief strategist at the unit of Sumitomo Mitsui Financial Group Inc., Japan’s second-largest bank by market value.

Fibonacci analysis is based on a theory that prices rise or fall by certain percentages after reaching a high or low. Key percentage levels include 23.6, 38.2, 50, 61.8 and 76.4.

In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.

To contact the reporter on this story: Yumi Ikeda at yikeda4@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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