Talking Points:
- CAC 40 Uptrend Stalls Under Yearly Highs
- Support Found at the 10 DAY EMA at 5,387.86
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The CAC 40 continues to consolidate for the 6th consecutive session this month, with the Index trading down -0.25% so far for Tuesday’s trading. This lack of volatility continues despite this morning’s German ZEW Survey (May) missing expectations. The event was forecasted at an expected 22 but released at an actual reading of 20.6. Top CAC 40 leaders for the session include Accor (+1.58%) and Carrefour (+1.57%). Top Losers for today’s trading include both Sanofi (-2.76) and Engie SA (-1.98%).
Technically, despite the recent consolidation, the CAC 40 may be considered in an ongoing uptrend. The Index remains above both its 10 day EMA (exponential moving average) at 5,387.86 and its 200 day MVA (simple moving average) at 4,827.91. Currently the CAC 40 is relying on the 10 day EMA as a value of support. If prices remain above this value, traders may look for an advance in price to potentially challenge the standing 2017 high at 5,498.90. If prices close below this average however, it may suggest a change in the CAC 40’s short term trend. In this bearish scenario, traders may begin looking for the Index to trade back towards the April 28th swing low at 5,250.10.
CAC 40, Daily Chart with Averages
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Sentiment totals for the CAC 40 have continued to neutralize from its most recent extremes. Currently IG Client Sentiment reads at -1.21 with 45.2% of traders net-long the Index. This number remains slightly negative, which may be seen as bullish for the CAC 40 when read as a contrarian signal. In the event that the CAC 40 bounces from daily support, traders should watch sentiment to push back towards negative extremes of -2.0 or more. Alternatively if prices breakout to lower lows, sentiment totals may flip positive for the first time since February of this year.
--- Written by Walker, Analyst for DailyFX.com
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