The euro may rise more than 2 percent to an 11-week high against the yen after completing a “golden cross” pattern last week, said Pak Lai Ng, a technical analyst at Forecast Pte in Singapore. Europe’s currency is likely to extend last month’s 4.3 percent rally versus the yen to at least the 100-day moving average of 116.74 yen, a level that capped its gains after a previous golden cross was triggered in April, Ng said. The golden cross occurred on July 27, when the 20-day moving average passed above the 50-day moving average, according to data compiled by Bloomberg. “The euro-yen is still going up,” Ng said in an interview. “The 20-day and 50-day moving averages are showing some indication of this.” The euro traded at 114.11 yen as of 8:19 a.m. in Tokyo from 114.00 yen in New York yesterday. It reached 114.74 yen on July 28, the highest since May 18. The 116.74 yen level was last seen on May 14. Initial resistance for the euro is at 115.19 yen, Ng said. That level represents a 38.2 percent retracement of the European currency’s fall from the April 5 high of 127.92 yen to the June 29 low of 107.32 yen, based on a series of numbers known as the Fibonacci sequence. Resistance is an area where sell orders may be clustered. 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 a currency may move to the next level. In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index. To contact the reporters on this story: Ron Harui in Singapore at rharui@bloomberg.net

Source