The dollar may decline to the lowest since April against the Swiss franc because of “bearish trend conditions,” UBS AG said, citing trading patterns.
The greenback may drop to 90.02 centimes, the low on April 2, should it break below 90.84 and depreciate to 90.41, Richard Adcock, a foreign-exchange and fixed-income technical strategist in London, wrote in a note dated yesterday. The dollar dropped 0.1 percent to 91.26 centimes as of 2:49 p.m. in Tokyo. It touched 90.84 on Dec. 20, the lowest since May 2.
The dollar’s moving average convergence/divergence against the franc was minus 0.0056, while its signal line was minus 0.0052, data compiled by Bloomberg show.
“The pair has consolidated over the past few trading sessions having tested the support offered by the Dec. 20 low,” he wrote. “The possibility of upside appears to be limited in time and extent as bearish trend conditions are still in place with the MACD below its zero line.”
MACD is a gauge of momentum and is calculated by subtracting the 26-day exponential moving average from the 12 day average. The MACD line moves above and below the zero line while 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 predict changes in a security, currency or index.
To contact the reporter on this story: Naoto Hosoda in Tokyo at nhosoda@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
