Jan. 3 (Bloomberg) -- The euro may be poised for “new trend lows” if it sustains losses below $1.2903, Skandinaviska Enskilda Banken AG said, citing trading patterns.
The 17-nation currency declined to as low as $1.2858 on Dec. 29, which is the 100 percent Fibonacci retracement level of its climb to the 2011 high of $1.4940 reached on May 4, according to data compiled by Bloomberg.
“A move below $1.2903 will now confirm that new trend lows are under way,” SEB analysts Anders Soderberg and Dag Muller wrote in a report yesterday. The “violation of $1.2860 spells further trouble for the common currency,” which may drop to less than $1.19, they wrote.
The euro rose 0.3 percent to $1.2972 as of 10 a.m. Singapore time. The currency last slid past $1.19 on June 7, 2010, when it dropped to as low as $1.1877.
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 support, indicates it may move to the next level. Support refers to an areas where buy orders may clustered. Resistance is where there may be orders to sell.
In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.
--Editors: Garfield Reynolds, Benjamin Purvis
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