News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • Long wick candles are recurrent within the forex market. This makes understanding the meaning behind these candles invaluable to any trader to comprehend the market dynamics during a specific period. Learn about the importance of extended wicks here: https://t.co/SIpslvhX0J https://t.co/jVxcE1QUBs
  • Safe haven stocks also allow traders to diversify their portfolio and reduce risk. Learn if safe-haven stocks are made for you here: https://t.co/MTc4tUDD6c https://t.co/DOQ6tyzep9
  • Knowing how to accurately value a stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZFxlk https://t.co/WQLZ1X7gIY
  • but the next major point in my view to monitor will be 52.76 - at least in the short term.
  • #Brent having broken above the pre-OPEC drop off at 45.51 is a huge deal considering it failed to crack resistance there in August (leading to the invalidation of "uptrend 2") and the psychological significance of that level https://t.co/LkEyRxFhnq
  • The New Zealand Dollar looks poised to extend its push higher against its haven-associated counterparts on robust economic data and a less dovish stance from the RBNZ. Get your $NZD market update from @DanielGMoss here:https://t.co/vytr4OR1Jy https://t.co/ZcxEUWIm8O
  • It seems the markets are riding high, but risk is always lurking around the corner. Consider your escape plan before you find yourself in collapsing market. What are the top havens for different conditions in 2020? Find out from @JohnKicklighter here: https://t.co/1oeXWEsJkb https://t.co/x8uyOHLtgE
  • The Swiss Franc may continue higher against the US Dollar as technical pressure favors USD/CHF bears..Get your $USDCHF market update from @FxWestwater here:https://t.co/yqJbbhAWiu https://t.co/CaMR0Vqd1m
  • The US Dollar lost ground to most ASEAN currencies as Emerging Market assets climbed despite US economic woes. USD/INR is eyeing third-quarter Indian GDP at the end of the week. Get your market update from @ddubrovskyFX here:https://t.co/urDN2b5Nwd https://t.co/toSDbVZCSi
  • The global stock market can be categorized into specific groups or ‘stock market sectors’. Organizing the vast number of stocks in this way helps traders to view assets in a more manageable way. Get your stock market sectors basics here: https://t.co/5gbiHmY8yl https://t.co/mQ6ty8Yalv
CAC 40, DAX, S&P 500 - French Election, 'Sell the News' in the Works?

CAC 40, DAX, S&P 500 - French Election, 'Sell the News' in the Works?

2017-05-06 04:44:00
Paul Robinson, Strategist
Share:
CAC 40, DAX, S&P 500 - French Election, 'Sell the News' in the Works?

What’s inside:

  • Outcome of French election between Macron, Le Pen to dominate risk sentiment to start the week
  • ‘Gap-n-trap’ scenario in the cards on Macron Victory, big risk-off if Le Pen surprises
  • Other key data events on the docket, key technical developments

CAC 40

The election. Will we see a Macron victory as expected or a surprise win by Le Pen? In the likely event we see Macron become the next president of France, a gap higher in the CAC is a reasonable expectation – but will it hold if it does? The CAC finished last week with a sharp rally, rising to its best levels since January 2008. The 7%+ run since the Friday before the first-round election is setting the market up for a ‘sell-the-news’ gap on a Macron victory. If the market gaps up and then fills the void it doesn’t necessarily mean the overall run higher will have come to an end, but a short-term retracement could be in order following a ‘euphoric’ rise. If Le Pen wins? The CAC will likely have the hurts put on it as market participants haven’t priced in such an outcome. The sell-off would likely be quite violent.

In terms of scheduled ‘high’ impact economic events the docket in France/Euro-zone is fairly light beyond the election-front. Mario Draghi will be speaking in Dutch Parliament on Wednesday and German GDP is due out Friday morning. For the full line-up of scheduled data events, check out the economic calendar.

Putting the recent run into perspective with respect to the long-term trend; the CAC is trading well above the 2000-2017 trend-line we’ve discussed before. To find substantial levels of resistance we need to go back to peaks formed a few hundred points higher back in 2007. It doesn’t mean the CAC has a few hundred points to go before it will stop rising, but it’s worth noting that not a lot stands in its way if it can maintain the intermediate-term trend. Looking lower, the first level of notable support doesn’t arrive until the 4/24 gap-low of 5228, then the prior swing-high 5140, and finally the full gap-fill from the first-round at 5059. Not likely we’ll see the latter two levels this coming week unless Le Pen wins.

CAC 40: Daily

CAC 40, DAX, S&P 500 - French Election, 'Sell the News' in the Works?

Created with TradingView

For a longer-term view on markets, check out our Q2 forecasts.

DAX

Front and center to start the week will be the outcome of the second and final round of the French elections; Macron is a heavy favorite to win. Will the CAC and risk-on respond positively to the ‘expected’ outcome, or will it be a “sell the news” scenario? We’re about to find out. If Le Pen pulls off the upset, it’s safe to say risk markets will be moving in reverse. Looking beyond the election, ‘high’ impact events include Draghi speaking in Dutch Parliament on Wednesday and the release of German 1Q GDP on Friday. For details and a full line-up of upcoming events, see the economic calendar.

Last week, the DAX made good on the quiet consolidation we noted the week before; rallying with a fair amount of force throughout the week. In terms of resistance, we had a top-side trend-line extending over peaks from August and another top-side t-line running over highs since February; both viewed as minor resistance, and both were treated as such. To finish the week, the DAX closed above the February line, and now leaves us with no ‘official’ form of resistance to operate off of. We’ll now look to those sloping lines as potential support levels. The trend is up, momentum is strong, so there is little to make a case for shorts – market participants will likely view minor set-backs as buying opportunities until we see something suggesting a trend-change is upon us. But before we can think about “normal” technical developments we’ll first need to see what happens in France on Sunday.

DAX: Daily

CAC 40, DAX, S&P 500 - French Election, 'Sell the News' in the Works?

Created with TradingView

S&P 500

Looking ahead to next week, market participants will be reacting to the outcome of the French run-off election between Macron and Le Pen. The futures market will move on developments in European markets. If Macron wins we could see another gap higher as we did following the first-round results. But as discussed above, the ‘gap-n-trap’ scenario could see the CAC 40 fade long before the US open arrives. If that is the case, overnight futures gains could be erased by the time the US open rolls around. It’s just a scenario at this time, but one we’ll be tracking should things unfold in that direction. If Le Pen pulls the surprise victory, a gap-down and sell-off will likely be in play.

Moving past Monday, the economic calendar is back-end heavy with ‘high’ impact data releases – Friday holds CPI, Advance Retail Sales, and U of M Confidence. As is often the case, the bigger response to any surprise prints in data will likely take place in the FX and rates markets. For a full run-down off all scheduled economic events, see the economic calendar.

The S&P looked poised heading into last week for a break to new record highs, but the consolidation continued all through last week. Under “normal” conditions we would expect the S&P to make good on a breakout as it closed last week just two points shy of the March 1 record high. There is strong support from around 2080 down to 2069 before the market would fall into the 4/24 gap (a scenario we don’t expect at this time).

S&P 500: Daily

CAC 40, DAX, S&P 500 - French Election, 'Sell the News' in the Works?

Created with TradingView

Live events held daily by DailyFX analysts, for a full line-up see theWebinar Calendar.

---Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email bysigning up here.

You can follow Paul on Twitter at@PaulRobinonFX.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES