The euro may strengthen to a six-week high against the British pound should the currency close above so-called resistance between 90.50 pence and 90.80 pence, Citigroup Inc. said, based on trading patterns. Resistance at 90.50 pence represents the 55-day moving average and the 90.80 pence level is the neckline of a “double bottom” pattern, New York-based Tom Fitzpatrick and London- based Shyam Devani, wrote in a research note yesterday. A double bottom occurs when a currency makes two consecutive troughs of about the same depth, and indicates it may rebound. The neckline passes through the highest point of the double bottom. The euro-pound “looks set for higher levels,” the Citigroup analysts wrote, also citing daily momentum indicators such as the stochastic oscillator. Europe’s single currency advanced to 89.93 pence as of 8:21 a.m. in London from 89.84 pence in New York yesterday when it reached 90.37 pence, the highest level since April 27. Should the euro close above resistance between 90.50 pence and 90.80 pence, the currency is likely to extend gains to as high as 94 pence, the analysts wrote. The 94 pence level was last seen on March 27. A stochastic oscillator chart measures the closing price of a security relative to its highs and lows during a particular period to try to predict whether it will rise or fall. A resistance level is where sell orders may be clustered. 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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