Jan. 21 (Bloomberg) -- The euro may strengthen 2 percent against the Swiss franc if it rises beyond an area of so-called resistance, UBS AG said, citing trading patterns.
If the euro can climb past last week’s high of 1.2569 francs, it will appreciate toward 1.2662, the 38 percent retracement of its decline from October 2007 and August 2011, said Richard Adcock, a technical strategist in London, citing Fibonacci analysis. Any decline will be limited by support at 1.2379 francs, the 38 percent retracement of this month’s advance, Adcock wrote today in a note to clients.
“Once the break of 1.2569 francs is seen, the move to 1.2662 will be within a couple of days,” Adcock said in an interview confirming the contents of the note. “If the 1.2379 support does give way it’ll be a deeper sell-off but the bullish themes will remain.”
The euro weakened 0.3 percent to 1.2411 francs as of 10:32 a.m. London time after appreciating to 1.2569 on Jan. 18, the strongest level since May 20, 2011. The currency has climbed 2.8 percent against the franc this year.
Resistance refers to an area on a graph where analysts expect sell orders to be clustered. Support is where they may be orders to buy. Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low.
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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