CAC breaks 5K barrier

March 16, 2015

European stocks have been rallying sharply in recent times as the ECB’s €60 billion-a-month of quantitative easing programme continues to push government bond yields lower, which in turn boost the appeal of riskier equities. Sentiment has improved further thanks to the recent upsurge in euro zone data surprises.  As a result of the intense buying pressure, some of the major European indices have broken key resistance levels, leading to further follow-up technical buying.

One such market has been the CAC index, which broke through another major hurdle last week when the psychological 5,000 mark was taken out. The French benchmark stock index has also recently broken through a key Fibonacci-based resistance area around 4740/55, which we had highlighted in detail in our last report on February 10 HERE. The fact that CAC has rallied steadily with relatively small intra-day volatility is indicative of a strong bullish trend. Indeed, this is highlighted by the Relative Strength Index (RSI) hovering around the 70 mark for a sustained period of time, which violates the bearish “overbought” argument. That however is not to say that the market will not stage a sell-off; rather, that the probability of the bullish trend to continue is higher than under normal conditions when the RSI is at 70.

With the 5000 threshold broken now, this level may turn into support upon retest in the near future. Another potential level of support to watch is 4975, which as well as a resistance-turned-support also corresponds with a bullish trend line. Therefore, until and unless the index breaks below 4975, the path of least resistance remains to the upside.  That said however a few more Fibonacci-based resistance levels are fast approaching which may at least encourage some profit-taking. These are:

From the last of the above-mentioned Fibonacci levels it should become clear that CAC has not yet fully erased the losses suffered during the Great Financial Crisis. It is therefore massively underperforming the German DAX index, which surpassed 12,000 for the first time today, and the UK’s FTSE, which hit a fresh record high a couple of weeks ago before pulling back slightly. In other words, the CAC has potentially a lot of ground to make up. This makes it even more bullish.

Figure 1:

Publication source
FOREX.com information  FOREX.com reviews

January 16, 2017
Surging equities at risk ahead of earnings season
While earnings season has started on a very positive footing, however, banks and other financial companies were already expected to shine more than others due to rising interest rate expectations. As non-financial companies begin to report in the coming weeks...
January 16, 2017
Oil prices were unmoved
After reaching 56.50 dollars per barrel Brent rolled back to 55.50. The benchmark started Friday in a consolidation. Brent extended its sideways trades during the European session. The “black gold” was range-bound-to lower during the day...
January 16, 2017
XAUUSD at major resistance, time to sell
We turn bearish below 1198 resistance (Fibonacci retracement, horizontal resistance) as we prepare to see a strong move down to 1176 support (Fibonacci retracement, recent swing low support, Fibonacci projection)...

FOREX.com Rating
Fort Financial Services Rating
Orbex Rating
FxPro Rating
OctaFX Rating
Grand Capital Rating

OptionRally Rating
OptionBit Rating
TropicalTrade Rating
Grand Option Rating
Beeoptions Rating
Empire Option Rating