Euro Stoxx Futures Target May Highs: Technical Analysis

(Corrects parent company in second paragraph of story first published on July 29.)

Euro Stoxx 50 Index futures might return to the highs seen in May should the contracts close above the 2,753 level, according to InterTrader.

To continue recent gains, the futures must climb through the Fibonacci level indicated by the 23.6 percent retracement of the rally from April 18 to May 28, said Steve Ruffley, London-based chief market strategist at the spread-betting broker, a unit of Bwin.Party Digital Entertainment Plc.

“The market has found overall support and it’s breaking through Fibonacci levels,” Ruffley said in a phone interview. “It will reach new highs if we close above 2,753, provided we don’t get any negative news or rumors from the macro end.”

Futures on the Euro Stoxx 50 expiring in September rose 0.3 percent to 2,751 at 3:43 p.m. in Frankfurt today. The Euro Stoxx 50 (SX5E), the benchmark index for euro-area equities, has climbed 9.5 percent since reaching the lowest close in seven months on June 24 as Federal Reserve Chairman Ben S. Bernanke moved to ease speculation that any tapering in the bank’s bond-purchasing plan is pre-determined.

Fibonacci analysis marks retracement levels of the difference between high and low points on a chart. The ratios used, such as 23.6 percent and 38.2 percent, were identified by 13th century mathematician Leonardo of Pisa and correspond to proportions found in nature.

“We are in a bull run even if the market is consolidating in the short term,” Ruffley said. “The Euro Stoxx shows the most upside room among the equity indices I look at.”

Technical analysts study charts of trading patterns and prices to predict changes in a commodity, currency or index.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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