Bloomberg News

Asia Dollar Index to Fall on Bollinger Band: Technical Analysis

September 14, 2011

Sept. 14 (Bloomberg) -- Asia’s main currency index may decline as much as 1.6 percent in the coming weeks as technical indicators suggest the dollar may rally further, according to Barclays Capital.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, may drop to near the lowest closing level in 2011, after slipping below the 200-day moving average this week, said Dhiren Sarin, chief technical strategist for Asia Pacific at Barclays. A widening of the index’s Bollinger band, which traders use to judge support and resistance levels, signaled the current slump could mimic the 4 percent slide in May 2010, he said.

“The market already completed a topping pattern and the flight-to-quality has justified maintaining a bullish dollar view,” Singapore-based Sarin said in an interview today. “The dollar seems to revel in bad news.”

The Asia Dollar Index fell 0.2 percent to 117.43 as of 12:43 p.m. in Hong Kong and touched 117.34, the lowest level since April 1. The security’s 200-day moving average stood at 117.65 today.

“With the breakdown through the 200-day moving average, we are likely going to see a bigger retracement,” said Faizal Yussof, who trades currencies based on charts at KAF Investment Bank Bhd. in Kuala Lumpur.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

--Editors: Andrew Janes, Ven Ram

To contact the reporters on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net; David Yong in Singapore at dyong@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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