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The CAC 40 Continues Post ECB Consolidation

The CAC 40 Continues Post ECB Consolidation

2016-03-16 12:30:00
Walker England, Forex Trading Instructor
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Talking Points

  • The CAC 40 Trades Down .27%
  • Prices Remain in a Consolidation Pattern
  • SSI Reads Neutral at +1.14

CAC 40 Daily Chart

The CAC 40 Continues Post ECB Consolidation

(Created using Marketscope 2.0 Charts)

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The CAC 40 is trading down a modest .27% on the day, as the Index continues to consolidate under Thursdays high at 4,582. Renault is currently leading the Index trading up 1.88% on the day. Technical traders should note that today’s price action marks the 4th day of trading inside of Thursday’s daily candle. Currently Thursdays high is acting as resistance for the Index, which is found at a price of 4,582. Conversely, Thursday’s low is found at a price of 4,305, which is acting as support. These values were put in place after the CAC 40 rapidly rallied, then alternatively declined to a monthly low after the ECB’s rate decision.

If prices continue to consolidate, traders may elect to wait for a price breakout in the markets chosen direction. Traders may identify preliminary price targets by extrapolating a 1X extension of Thursday’s 277 point range. This places initial bullish targets near 4859. A move to this value would be significant, as the CAC40 would be printing new yearly highs at this point. Alternatively, bearish targets may initially be found near 4,028. A move to this value would suggest that the Index is returning to its predominant daily downtrend and potentially setting up to challenge yearly lows at 3,890.

SSI (speculative sentiment index) for the CAC 40 (Ticker: FRA40) is currently reading at +1.14. This sentiment reading is relatively neutral and is congruent with the markets current consolidation. In the event of a breakout, traders should continue to monitor SSI. As a contrarian index, a bullish breakout may be confirmed by an extreme negative reading. Conversely, any bearish breakouts may be validated by an extreme positive SSI reading.

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