Yen May Advance to 81.19 Per Dollar, RBC's Davis Says: Technical Analysis
The yen may strengthen to 81.19 per dollar if the Japanese currency can move through the top line of an ichimoku cloud, according to Royal Bank of Canada.
A daily close below 83.40 yen, the top of the cloud pattern, could mean the yen will advance to 82.16, followed by 81.19, George Davis, chief technical analyst for fixed income and currency strategy in Toronto at the bank, Canada’s largest, said in an interview.
Ichimoku charts are used to predict a currency’s direction by analyzing the midpoints of historical highs and lows. The cloud refers to the area between the first and second leading span lines on the chart and is used to show an area where buy orders may be clustered. Such a level is also known as support.
“Right now that cloud top is serving as some support and preventing a move lower,” Davis said. “The top boundary of the Cloud is at 83.40 and the bottom of the cloud is at 82.16.”
The Japanese currency surged as much as 1 percent today to 83.43 per dollar before trading at 83.65, up 0.7 percent. Earlier it weakened to 84.32.
“Dollar-yen has pierced a short-term support trend line at 83.84 that dates back to Nov. 9,” Davis said. “If we close below that 83.40 level, the market will likely focus on 82.16 as the next downside level to watch.”
To contact the editor responsible for this story: Dave Liedtka at firstname.lastname@example.org