A gauge of euro-area insurers may drop as much as 7 percent over the next month after breaching a key support level, according to Natixis.
The Euro Stoxx Insurance Index yesterday moved out of a bullish channel it had traded in since a July low, said Ouri Mimran, a technical analyst at Natixis in Paris. That indicates the gauge may decline to the lower limit of a medium-term channel, he said.
“The index has broken below a key support level at 160, which is a bearish signal,” Mimran said. “This suggests a short-term downward trend, possibly towards the 146.88 level. In the medium term, I’m still bullish.”
The 146.88 level also represents the 38.2 percent Fibonacci retracement of the advance from June 1 to Jan. 14, Mimran said. Euro-area insurance stocks surged 54 percent during that period, outperforming the Euro Stoxx 50 Index, which gained 31 percent.
The gauge of insurers tumbled 3.6 percent to 157.96 yesterday, the biggest drop since August, as inconclusive election results in Italy spurred concern that the euro-area debt crisis may worsen.
In technical analysis, investors and analysts study charts of prices and volume to predict changes in a security, commodity, currency or index.