Bloomberg News

Aussie Dollar May Climb to One-Month High: Technical Analysis

October 13, 2011

Oct. 14 (Bloomberg) -- The Australian dollar may rise versus the yen through the so-called cloud of its ichimoku chart to a one-month high, according to Ueda Harlow Ltd.

The currency, known as the Aussie, has stayed above its 21- day moving average and the baseline of the ichimoku chart since surpassing the key levels on Oct. 12. Ichimoku charts are used to predict a currency’s direction by analyzing the midpoints of historical highs and lows. The chart’s baseline plots the sum of the highest high and lowest low in the preceding 26 trading days.

“Because the Aussie is holding up above these lines, it will have more upside as long as the currency is supported” by the baseline and 21-day moving average, said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow. The lower end of the ichimoku cloud is the next target, he said.

The lower end was 80.75 yen today. Should the Australian dollar break above that level, it is likely to rise to 82.83 yen, which is above the upper end of the cloud, Yamauchi said.

Australia’s dollar fell 0.3 percent to 78.18 yen at 11:27 a.m. Tokyo time. There may be a “correction” in the Aussie’s level as the currency’s nine-day stochastic oscillator of 91 signals that its recent gains were excessive, Yamauchi said.

A stochastic oscillator chart measures the closing price of a security relative to its highs and lows during a period to try to predict its direction. Exceeding the 80 level indicates to some traders that an asset’s price has risen too rapidly and is set to reverse course.

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

--Editor: Nate Hosoda

To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Kazumi Miura in Tokyo at kmiura@bloomberg.net.

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.


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