Talking Points
- The CAC 40 trades lower on ECB News
- Channel support found at 4,736
- New lows may pressure a price drop to 4,400
CAC 40 (4 Hour Chart)
(Created using TradingView Charts)
The CAC 40 is trading down -1.29% from this morning’s open, after a series of drastic price action swings in afternoon trading. Today’s volatility has directly revolved around the ECB (European Central Bank) and their decision to cut the banks deposit rate by 10 basis points. As prices are now bouncing over today’s low traders are left wondering if prices will remain supported above 4,736. Technically speaking, if today’s low remains in place it opens up the possibility of the CAC 40 trading in an ascending price channel. This pricing pattern displayed above currently holds resistance near 4,986. As prices bounce off support, bullish traders will look for prices to return towards this value.
If a bearish bias does return to the market, traders will watch for price action to again return towards values of support. A move below today’s low would invalidate the previously described price channel, as the CAC 40 would then be pushing out towards new monthly lows for December. A breakout of this nature would signal a continuation of the current downtrend, as well as expose longer-term values of support. This includes the previously mentioned daily ascending trendline creating support near 4,400, which was mentioned in last week’s article.
While this week’s major news events have wrapped up for the Euro-Zone, traders should continue to monitor the DailyFX economic calendar. Next week starts off with Euro-Zone GDP being reported on Tuesday at 10AM GMT. Expectations are set for the event at 1.6%. However, as the current market environment has shown, these numbers have the potential to heavily influence the European equities market.
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