April 19 -- The dollar may advance against Japan’s currency should it remain above a key support level at 90.80 yen, Commerzbank AG said, citing technical indicators.
The U.S. currency slid through “double Fibonacci support” at 92.40 and 92.20 yen, according to Karen Jones, head of fixed- income, commodity and currency technical analysis at Commerzbank in London. The dollar may advance to 95.10 yen, the 61.8 percent Fibonacci retracement from its April high, before reaching 97.80 yen, its August 2009 peak, she said.
“The dollar is coming back to an area where it should hold and recover,” Jones said in a telephone interview today. “The 200-day moving average at 91.37 forms support, but more importantly, it appears to be returning to the point of break- out from its previous three-year downchannel at 90.80.”
The dollar weakened 0.2 percent to 91.98 yen as of noon in London, after slipping earlier to 91.60 yen, the lowest level since March 24.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, currency or index.
Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break above resistance or below so-called support indicates a currency may move to the next level.
A resistance level is an area on a chart where technical analysts anticipate orders to sell a currency and a support level is an area there they anticipate orders to buy a currency.
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