Talking Points:
- CAC 40 to Trendline Support Near Daily Lows
- Further Bearish Breakouts Expose the 200 SMA at 4380.11
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The CAC 40 has closed lower (-1.24%) as equities markets as a whole have declined ahead of this afternoons FOMC rate decision. This price decline has been led by BNP Paribas (-3.75%), AXA (-3.75%) and Peugeot trading down (-3.48%) for the session. Of note, only three of the CAC 40 components closed higher. This includes Sanofi (+1.13), Unibail (+0.92%), and Nokia (+0.05%).
As prices continue to fall, technical traders should continue to look for key values of support. Below, we can see the CAC 40 settling for the day near daily support created from an ascending trendline. This line has been formed by connecting a series of lower highs, which includes the September 16th low at 4,310.90 and the October 13th low of 4,370.60.
CAC 40, Daily
(Created Using TradingView Charts)
In the short run, if this daily trendline fails to hold it opens the CAC 40 up to a further decline. In the event of a breakout, traders should next look for a challenge of the 200 day SMA which is currently located at 4,380.11. A move beyond this point would be significant, as it would suggest a new bearish trend is in development for the Index.
Alternatively, in the event that the CAC 40 bounces at present levels, it would suggest that the current bull trend may remain at least temporarily intact. In this scenario, traders should look for prices to move on the standing October high of 4,579.30. Longer term trend traders should continue to monitor this value as a significant point of resistance. A move to a higher high would solidify the CAC 40’s current price decline as a retracement in a developing bull trend.
--- Written by Walker, Analyst for DailyFX.com
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