Dollar May Fall to Five-Week Low Versus Yen: Technical Analysis

(Bloomberg) -- The dollar may extend its decline against the yen to a five-week low of 91.74, Bank of Tokyo- Mitsubishi UFJ Ltd. said, citing trading patterns. The U.S. currency’s downtrend versus the yen hasn’t stopped, with “three clear dollar-selling signals starting to light up,” Masashi Hashimoto, a Tokyo-based senior analyst at the bank, said in an interview, citing a daily ichimoku chart.The first signal was the dollar’s fall below the lower end of the ichimoku cloud, which was at 94.38 yen today, according to Bloomberg data. The second signal would be the dollar’s “conversion line” sliding beyond the “base line,” Hashimoto said. Both are almost at the same level today, with the conversion line at 95.42 yen and the base line at 95.44 yen. The third signal would be the dollar’s “lagging span,” which was at 93.90 yen, falling below the current exchange-rate level.

The dollar fell to 93.94 yen as of 12:01 p.m. in Tokyo from 94.19 yen in New York yesterday, and was headed for a second weekly drop versus the yen. The greenback declined to 93.67 yen on Aug. 19, the lowest level since July 23.The initial target for the dollar is the July 22 low of 93.10 yen, Hashimoto said. Should the U.S. currency drop below that support level, it may extend losses to the July 13 low of 91.74 yen, he said. Support is where buy orders may be clustered.An ichimoku chart analyzes the midpoints of historic highs and lows. The conversion line is the same calculation over the past nine trading days. The baseline on the ichimoku chart is the sum of the highest high and the lowest low over the past 26 trading days. A lagging span is the most recent closing price plotted 26 days behind the current level.