Technical analysis: Euro may drop further after breaking average

Nov. 11 — The euro is poised to drop against the pound to a level last seen in September 2010 after trading below its 200-week moving average for the first time in more than four years, according to Bank of America Corp.

The 17-nation currency has completed a “bearish continuation flag,” indicating a drop to 82.85 pence versus the pound, according to MacNeil Curry, head of foreign-exchange and interest-rates technical strategy at Bank of America Merrill Lynch in New York.

“We look for further weakness before greater signs of stabilization,” Curry wrote today in a research note to clients. He couldn’t immediately be reached for comment.

The euro appreciated 0.3 percent to 85.63 pence against the pound at 2:24 p.m. New York time, gaining for a second straight day and paring its weekly drop to 0.4 percent. The euro has lost 0.6 percent versus sterling this month.

In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index. A flag formation is named for its resemblance to an inverted flag on a pole.