Euro May Reach $1.472 on ‘Bullish Breakout’: Technical Analysis

By Candice Zachariahs

(Bloomberg) -- The euro may approach its December high of $1.4720 after breaking through “key” resistance at $1.4338, JPMorgan Chase & Co. said, citing trading patterns.“A bullish breakout is under way following the impulsive advance” through the June high, Niall O’Connor, a technical analyst at JPMorgan in New York, wrote in a note to clients today. “The upside bias will likely shift into a grind higher, but keep in mind there is little evidence of a topping pattern right now.”

The euro climbed as high as $1.4445 yesterday, the strongest since Dec. 18, before closing at $1.4412, a 16 percent advance from this year’s low of $1.2457 on March 4. The 16- nation currency traded at $1.4395 as of 10:07 a.m. in Tokyo.“We see upside risk into the $1.45 area, if not a closer test of the 1.4720 December high,” O’Connor wrote.The euro advanced for a third day yesterday as the Dollar Index, which the ICE uses to track the dollar against currencies of six major U.S. trading partners including the euro and the yen, dropped to a 10-month low of 77.451.

The Dollar Index has broken a number of so-called support levels, including its 61.8 percent Fibonacci retracement from the 2008 low of 70.698, confirming a “bearish bias,” O’Connor wrote. The next major target for the Dollar Index is its September 2008 low of 75.89, he said.Fibonacci analysis uses ratios, which are based on the sequence identified by an Italian mathematician in the 13th century, to predict support and resistance levels for prices. Support is where buy orders may be clustered, while resistance is where there may be sell orders.n technical analysis, investors and analysts study charts of trading patterns and prices to forecast price changes in a security, commodity, currency or index.