July 1 (Bloomberg) -- The euro may climb to almost a two- month high against the yen next week after rising above key technical levels, Ueda Harlow Ltd. said, citing trading patterns.
The 17-nation currency broke above its 21-day moving average and the so-called cloud this week in a daily ichimoku chart, said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow, which provides foreign-exchange margin-trading services.
The chart also shows the first and second leading span lines are set to converge, compressing the cloud at around the 116.60 yen level on around July 4. Should the euro enter the cloud and stay inside after the cloud flips to above the first span line, the next target will be 118.38 yen, according to Yamauchi.
“There’s a bit of room for an upside move for the euro,” said Yamauchi. “If the currency breaches the top of the cloud after the flip, the euro may advance to 120 yen next week at the earliest.”
The euro was at 116.82 yen at 7:33 a.m. in Tokyo from 116.84 yen in New York yesterday. It last traded at 120 yen on May 4.
Ichimoku analysis is used to predict a currency’s direction through analyzing the midpoints of historical highs and lows. The cloud refers to the area between the first and second leading span lines on the ichimoku gauge and is used to show an area where buy orders may be clustered.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
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