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Talking Points

  • The CAC40 bounces from 2016 lows
  • Channel resistance is found near 4,800
  • SSI currently reads at +1.60

CAC40 (Ticker FRA40) 1Day Chart

The CAC40 Rebounds up 1.97%

(Created using Marketscope 2.0 Charts)

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The CAC40 is beginning to retrace some of its early 2016 losses after bouncing off of long term support. For Friday, the CAC40 is trading up 1.97%, and is one of many equities markets trading higher on the day. With prices moving higher, it suggest that the Index may be trading in a descending price channel. As pictured above, this channel resistance has been formed by connecting the August and December 2015 highs. Conversely, the support line has been draw by connecting the September 2015 and January 2016 lows. If the CAC40 continues to advance, traders tracking this channel will look for prices to ascend towards resistance near 4,800.

Alternatively, in the event that prices fail to reach channel resistance, it may suggest that the current move higher is just a smaller retracement in a broader downtrend. In this scenario, trend traders may begin watching values of support, to begin planning breakout entries back in the direction of the trend. Current values of support for the CAC40 include the psychological 4,100 level, along with the current 2016 low of 4,064.

Traders tracking sentiment for the CAC40 (Ticker FRA40), will find that SSI (Speculative Sentiment Index) is currently reading at +1.60. While this value reads slightly bearish, traders looking for a turn back towards the primary trend may elect to wait for SSI to reach an extreme of +2 or higher. Conversely, if bullish conditions were set to continue, traders monitoring SSI would look for the reading to turn negative in the coming week.

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