By Yoshiaki Nohara and Hiroko Komiya
Nov. 20 (Bloomberg) -- The dollar may decline to an 11- month low of about 87 yen, according to Tokai Tokyo Securities Co., citing trading patterns.
The dollar is poised to keep weakening as it remains below its 5-, 20- and 90-day moving averages, said Yoh Nihei, a Tokyo- based trading group manager at Tokai Tokyo.
"The dollar’s upward moves are capped," Nihei said yesterday. "Plus, the 5-day moving average is heading downward.
So are the 20- and 90-day moving averages."
The U.S. currency may initially drop to the 88.01 yen level reached on Oct. 7, the weakest since Jan. 23, Nihei said. Should it fall below that, the next level of so-called support would be
87.13 yen, this year’s lowest reached on Jan. 21, he said.
Support refers to an area where buy orders may be clustered.
The dollar traded at 88.98 yen as of 7:42 a.m. in Tokyo from 88.97 yen yesterday in New York.
Daily momentum indicators such as moving average convergence/divergence also show sell signals for the greenback, Nihei said. MACD charts can indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages based on 9-, 12- and 26-day periods.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.