The fall of the euro in the last month has led to the currency through key levels on a table Ichimoku call, indicating the decline may continue to $ 1.25 next year, Merrill Lynch Bank of America said, citing patterns trade.
The single currency reached a maximum of nine months of $ 1.4282 on Nov. 4, from $ 1.1877 on June 7, the lowest level since March 2006. The currency broke below the bottom of a chart Ichimoku the $ 1.3374 level, and its line of short-term conversion crossed below its long-term base. Also fell below $ 1.3080, representing a 50 percent Fibonacci retracement of the rally from June to November.
"After the euro broke below on key Ichimoku and Fibonacci levels, the momentum is clearly downward," said Tomoko Fujii, senior currency strategist at Bank of America Merrill Lynch in Tokyo. "With the downward trend likely to continue for at least several quarters, the euro will go down four-year high in June."
$ 1.2796 level "comes naturally to the view" as it is a 61.8 percent decline from a peak last month, with the next key level of $ 1.2445, a 76.4 percent change, Fujii said, citing the percentage changes provided by the Fibonacci sequence. The euro may fall below $ 1.25 next year at the earliest and the middle of next year at the latest, he said.
The currency has been the worst performer against the dollar so far this year after the Danish krone.
Ichimoku letters are used to predict the direction of a coin by analyzing the midpoints of highs and lows. Line charts conversion of the sum of the highest high and lowest low over the last nine trading days. The baseline is the same calculation in the last 26 days. The tag refers to the area between the lines first section and the second leader in the table and is used to show an area where buy orders may be grouped.
Fibonacci analysis is based on the idea that asset prices reach the peaks and valleys in a specific percentage of past trends in the table.
In technical analysis, investors and analysts charts on trading patterns and prices to forecast changes in the security, commodity, currency or index.
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