Euro May Resume Gain Versus Pound, UBS Says: Technical Analysis

By Anchalee Worrachate
Nov. 12 (Bloomberg) -- The euro, which lost 3.5 percent against the pound in the past month, may recover and rise to 94.11 U.K. pence as charts suggest its decline is about to reverse, according to UBS AG, which cited trading patterns.
The euro will have to advance above 90.60 U.K. pence to confirm the momentum after it broke a so-called trendline resistance of 90.12 pence yesterday, said Taso Anastasiou, a technical strategist in Zurich at UBS.
"That was the first sign that the market was flipping from a bearish condition to a more bullish environment," Anastasiou said in a telephone interview today. "But a break above 90.60 is an important positive development to confirm that the market is comfortable to push euro-sterling higher."
The euro slid 0.3 percent to 90.16 pence as of 2:10 p.m. in London, after gaining 1 percent yesterday. Against the dollar, the pound was little changed at $1.6568 and the euro fell 0.8 percent to $1.4863.
The euro is supported in the short term at 90.10 U.K. pence and 89.45 pence, Anastasiou said. Support is a level where buy orders may be clustered, while resistance is where there may be sell orders.
"As long as the euro-sterling holds above 89.45, the prospect for recovery for the euro is good," Anastasiou said.
Trendlines show price movements, connecting the highest and lowest values of a security or assets. In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.