(Bloomberg) -- The Australian dollar may extend its rally to a 10-month high of 85.64 yen, Bank of Tokyo-Mitsubishi UFJ Ltd. said, citing trading patterns. ustralia’s currency is poised to gain after completing a so-called double bottom when it made two troughs of about the same depth on July 8 and July 13, Masashi Hashimoto, a senior analyst at the unit of Japan’s biggest publicly traded bank, said in an interview. The currency rebounded from those lows to rise to 80.83 yen on Aug. 4, the strongest this year.“Strength in the Australian dollar and weakness in the yen will continue for the time being,” Tokyo-based Hashimoto said. Australia’s currency also “faces strong upward pressure” as its relative-strength index points to further gains, he said.
The Australian dollar traded at 80.23 yen as of 8:50 a.m. in Tokyo from 80.13 yen in New York yesterday. The Aussie, as it is known, has advanced 26 percent versus the yen this year, the second-best performer of the 16 major currencies, according to data compiled by Bloomberg.The target of 85.64 yen represents a 61.8 percent retracement of the currency’s drop from its July 2008 high of 104.50 yen to the October 2008 low of 55.13 yen, Hashimoto said, citing a series of numbers known as the Fibonacci sequence. The Australian dollar last rose to 85.64 yen in September 2008, the month Lehman Brothers Holdings Inc. collapsed.The Aussie-yen’s 14-day relative strength index, a gauge that compares the magnitude of gains and losses, is at 65, below the level of 70, which signals it may be overbought.
In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index. Fibonacci charts are based on the theory that securities tend to rise or fall by specific percentages after reaching a new high or low.
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