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Bund Futures May Rise on Fibonacci, UBS Says: Technical Analysis

Oct. 4 (Bloomberg) -- German bund futures may advance to as high as 139.19 should they break above a key resistance level, UBS AG said, citing technical indicators.

“Bunds are bullish while they trade above support at 136.91,” Richard Adcock, head of fixed-income technical strategy at UBS in London, wrote in a research note today. That level represents the 38 percent Fibonacci retracement of the recovery from 135.01 on Sept. 1, according to Adcock.

“As long as this remains the case, the expectation is for limited corrections and further price strength,” he said.

The bund futures contract expiring in December was little changed at 138.18 as of 10:49 a.m. in London. It reached 138.42 earlier, the highest level since Sept. 23.

“A break above yesterday’s 138.10 failure high is the next bullish trigger, opening the door to 139.19,” Adcock wrote. That’s the record high reached on Sept. 23, according to data compiled by Bloomberg.

A resistance level is an area on a chart where analysts anticipate orders to sell a security to be grouped. A support level is an area where they anticipate buy orders to be clustered. Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low.

To contact the reporter on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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