The New Taiwan dollar could rise 3.2 percent next year should the currency climb beyond the NT$32 level against the greenback, which would be a “bullish” signal, technical analysis by Forecast Singapore Pte said.
The NT dollar could strengthen to NT$31.02 on a break of NT$32, a threshold the central bank has been preventing the currency from advancing through, said Pak Lai Ng, a Singapore-based analyst at Forecast. It has only broken that level once this year on Oct. 1, when the currency reached NT$31.995 before retreating.
The NT$32 level is a 61.8 percent retracement of the US currency’s advance from a low in March last year of NT$29.95 to a high of NT$35.297 in March this year, Ng said, referring to a series of numbers known as the Fibonacci sequence.
“Provided the Taiwan dollar breaks NT$32, it will be bullish for the currency,” Ng said in an interview. The NT dollar will first target NT$31.40, a point on a trend line that links this year’s high for the greenback with the low in October, before rising to NT$31.02, he said.
The NT dollar climbed 0.1 percent to close at NT$32.281 versus the greenback on turnover of US$405 million, Taipei Forex Inc said. It has appreciated 1.7 percent this year as a planned accord with China that will boost investment and trade lured overseas investors.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Fibonacci levels are used to determine highs and lows for a currency and predict direction. They are 23.6, 38.2, 50, 61.8 and 76.4. A break past one of these signals a currency may test the next level, while failure indicates a gain or drop may stall.
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