Euro May Drop to Five-Month Low on Fibonacci: Technical AnalysisKevin Buckland
The euro is poised to drop to the lowest since November against the dollar, IG Markets Securities Ltd. said, citing trading patterns.
“Attention is on the March 27 low of $1.2750,” Junichi Ishikawa, an analyst at IG Markets in Tokyo, wrote in a research note today. “If that support is broken, there are no noteworthy technical points until the $1.26 level.”
At $1.268, Ishikawa points to the 62 percent retracement on the Fibonacci chart from the Feb. 1 high of $1.3711 to the July 24 low of $1.2043. Fibonacci analysis theorizes that prices rise or fall by certain percentages after reaching a new high or low.
The next level the euro could target is the Nov. 13 low of $1.2662, Ishikawa wrote.
The euro was little changed at $1.2848 as of 8:48 a.m. in London from yesterday. The 17-nation currency has fallen 2.6 percent this year.
In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index. Support refers to an area on a chart where analysts anticipate orders to buy may be clustered.