CAC 40 Double Tops at Channel Line
- CAC 40 carves a double top pattern
- Elliott Wave pattern could not push beyond the mid-line of the Elliott Wave channel
- Bears are activated on a move below channel support near 5200
The Elliott Wave pattern on CAC 40 is intriguing. CAC 40 appears to have finished the five wave impulse move at the Elliott Wave channel mid-line. This implies a weak market and is a bearish pattern.
This pattern suggests that a longer term correction is underway. The first battle of support emerges near 5,200 where the blue Elliott Wave support channel emerges as well as the bottom of the Ichimoku cloud.
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CAC 40 Elliott Wave and Ichimoku Pattern
Created using IG Charts
Any near term bulls would need to show themselves in CAC 40 near 5,200. If this level breaks, then the door is opened up to 4,900-5,000. We have two different levels appearing there.
First, the previous wave ‘iv’ extreme is near 5,000. Previous fourth waves tend to act like a magnet in corrective moves.
Secondly, the 38% retracement of the June 2016 (Brexit) low to the November 1, 2017 highs appears near 4,921.
Therefore, if 5,200 breaks, traders can look for further weakness down towards the 4,900-5,000 price zone.
Lower potential exists, but we will need to see the structure of how the correction develops to weigh the odds further.
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---Written by Jeremy Wagner, CEWA-M
Jeremy is a Certified Elliott Wave analyst with a Master’s designation. This report is intended to help break down the patterns according to Elliott Wave theory.
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