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CAC 40 Retests Daily Resistance

CAC 40 Retests Daily Resistance

Walker England, Forex Trading Instructor

Talking Points

  • The CAC 40 Tests Resistance After Opening Lower
  • Key Daily Resistance Resides at 4,582
  • Sentiment is Negative with SSI reading at -1.28

CAC 40 Daily Chart

(Created using Marketscope 2.0 Charts)

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The CAC 40 is trading up 0.11% this morning, after an initial gap lower on the open. Of the 40 listed components on the Index, 33 are currently trading higher. Arcelor Mittal is again leading the pack trading up 3.16%. Of the seven listed declining stocks, Kerring has the largest loss on the day trading down -.93%.

Technically, the CAC 40 is again testing key resistance at the March 2016 high at 4,582. I have been watching this value, because graphically this point represents a lower swing high in the CAC 40’s 2016 downtrend. In the event that prices break above 4,582, it may suggest a significant turn in market momentum. I should mention that the CAC 40 is currently down -1.33% YTD. If prices breakout higher, it opens the Index to attempt to trade above the current 2016 high at 4,653. Alternatively, if resistance holds and prices fail to breakout higher, price action would suggest that the CAC 40’s current rise in price is just a retracement in an ongoing downtrend. In this scenario, I will be looking for price to potentially test the April low at 4,211 and then move on yearly lows under 3,890.

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One tool that I like to use in order to validate potential breakouts is sentiment. SSI (speculative sentiment index) for the CAC 40 (Ticker: FRA40) is currently negative, reading at -1.28. This negative value has a slight bullish bias, but in the event of a breakout I would look for this Index to move towards a negative extreme. If prices fail to break higher, I would reasonably look for SSI to flip positive, and continue moving higher as prices decline.

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