Feb. 17 (Bloomberg) -- The euro may fall toward its lowest level in more than two years against the dollar after dropping below a key support level, Bank of America Corp. said, citing trading patterns.
The 17-nation currency’s slide below $1.3026 yesterday confirmed its decline through the 21-day moving average and signals a “larger bear trend,” according to a report by MacNeil Curry, the bank’s New York-based head of foreign- exchange and interest-rates technical strategy.
“The subsequent close through the 21-day and break of $1.3026 intra-day pivot points to a resumption of the larger bear trend targeting $1.2644/$1.2510 area support,” Curry wrote in the research note published yesterday. Support is where buy orders may be clustered.
The euro traded at $1.3134 as of 9:42 a.m. in Tokyo from $1.3130 in New York yesterday, when it fell to as low as $1.2974, the weakest since Jan. 25. The $1.2644 level was last seen on Jan. 16, when the currency retreated to $1.2626. The euro last touched $1.2510 on July 6, 2010, when it weakened to $1.2480.
The shared currency’s 21-day moving average was at $1.3137. Its moving average convergence/divergence, or MACD, was at 0.0036, below the signal line of 0.0045, according to data compiled by Bloomberg. A reading below the signal line indicates the euro may decline.
MACD is a gauge of momentum and is calculated by subtracting the 26-day exponential moving average from the 12 day average. The signal line is a nine-day exponential moving average of the MACD , and provides buy and sell signals.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
--Editors: Naoto Hosoda, Jonathan Annells
-0- Feb/17/2012 01:13 GMT
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