The euro is set to rise to its highest level against the dollar in more than a year after breaking through an area of so-called resistance, Credit Suisse AG said, citing trading patterns.
Breaching the $1.3309 resistance zone opens up an advance for the shared currency through the 50 percent Fibonacci retracement level at $1.3493 and eventually to $1.40, Credit Suisse analysts including Christopher Hine wrote in a note today, a level last touched in October 2011. The current is a follow-through from the completion of a long-term inverted head-and-shoulders reversal pattern in December, they wrote.
“Only a sustained breakdown through $1.2998 neutralizes the upside threat, while a violation of $1.2662 is required for a bearish tone to emerge,” wrote Hine, vice president of technical analysis for Credit Suisse in London.
The euro weakened 0.4 percent to $1.3326 at 2:33 p.m. New York time after appreciating on Jan. 14 to $1.3404, the strongest level since Feb. 29, 2012.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a bond, commodity, currency or index. Resistance is an area on a price graph where technical analysts anticipate sell orders to be clustered.
Fibonacci analysis, based on the work of 13th century mathematician Leonardo of Pisa, known as Fibonacci, is founded on the theory that prices rise or fall by certain percentages after reaching a new high or low.