The euro may extend its rally to a five-month high of 150 yen should the currency strengthen beyond a so-called neckline at 131.04 yen, Standard Chartered Bank said, citing trading patterns.
The level of 131.04 yen represents the neckline of a “potential double-bottom” pattern, Callum Henderson, Singapore-based head of foreign-exchange strategy at Standard Chartered, wrote today in a note to clients. Such a pattern forms when a currency makes two consecutive troughs of about the same depth, and indicates a currency may rebound. The neckline passes through the highest point of the double bottom.
“The medium-term outlook remains bullish as a potential basing pattern unfolds,” Henderson wrote. “This is taking the form of a double bottom, with confirmation expected to come on a sustained turn above the 131 area. When broken, a simple measuring objective will attract at 150.”
The euro traded at 129.14 yen as of 12:45 p.m. in Singapore from 129.17 yen late in New York yesterday, when it reached 130.32 yen, the highest level since Dec. 18. The euro last reached 150 yen on Oct. 1. The 16-nation currency has risen 2 percent versus the yen since Jan. 1 after a 22 percent decline last year, the worst annual drop since 1999.
From Bloomberg News.
The level of 131.04 yen represents the neckline of a “potential double-bottom” pattern, Callum Henderson, Singapore-based head of foreign-exchange strategy at Standard Chartered, wrote today in a note to clients. Such a pattern forms when a currency makes two consecutive troughs of about the same depth, and indicates a currency may rebound. The neckline passes through the highest point of the double bottom.
“The medium-term outlook remains bullish as a potential basing pattern unfolds,” Henderson wrote. “This is taking the form of a double bottom, with confirmation expected to come on a sustained turn above the 131 area. When broken, a simple measuring objective will attract at 150.”
The euro traded at 129.14 yen as of 12:45 p.m. in Singapore from 129.17 yen late in New York yesterday, when it reached 130.32 yen, the highest level since Dec. 18. The euro last reached 150 yen on Oct. 1. The 16-nation currency has risen 2 percent versus the yen since Jan. 1 after a 22 percent decline last year, the worst annual drop since 1999.
From Bloomberg News.