Jan. 27 (Bloomberg) -- Malaysia’s ringgit may advance 1.3 percent against the dollar in the next two weeks after it breached technical levels some traders consider significant, according to Mizuho Corporate Bank Ltd.
The currency strengthened beyond an Oct. 31 high of 3.0422 and a 200-day moving average of 3.0721 yesterday, a bullish signal for the ringgit, according to Hiroyuki Tanaka, chief technical analyst at Mizuho Corporate Bank in Tokyo. It also surpassed 3.0498, a 61.8 percent retracement of its decline from a July 27 high of 2.9335 and an Oct. 4 low of 3.2380 based on a series of numbers known as the Fibonacci sequence.
“People expected an Oct. 31 low for the dollar would be quite a big support for the greenback,” Tanaka said. “A break of this level indicates there’s some more room for the dollar to weaken versus the ringgit in the short term. The next target should be 3, which is a big figure.”
The ringgit strengthened 1.5 percent to 3.0375 per dollar as of 6 p.m. in Kuala Lumpur yesterday, according to data compiled by Bloomberg. The currency may climb to around 3 in a week or two, Tanaka said.
Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. Other Fibonacci levels are 23.6 percent, 38.2 percent and 50 percent. 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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