The European DJ Stoxx 600 Index could be due for a 36 percent rally and offers a relatively low risk at the moment, Edward Loef, technical analyst at Theodoor Gilissen Bankiers, told CNBC.
“I expect it to rally until year end … I think you should look at a 36 percent potential (for a gain) and a downside risk of around 9 index points. So it’s a reward-to-risk ratio of four to one,” Loef said.
The charts for the European DJ Stoxx 600 Index are showing “bullish signals,” meaning the index is a “buying opportunity right now,” he added.
The index is down more than 150 points in the past year as the global credit crunch as forced investors to sell stocks and seek safety.
The industrial sector will provide one of the catalysts for the expected European rally, Loef said. And the euro should rise against the dollar, he added.
Video: watch Edward Loef on CNBC above.
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