After yesterday’s break above its key resistance barrier, at 5440, CAC 40 made its way higher and continues to trade above its short-term upside support line taken from the low of August 15th. Recently, the price had distanced itself even more from that line and so far, the index is not showing any signs of reversal. At the time of writing, CAC 40 is getting held near the 5503 barrier, but given today’s “risk on” mood, the index might continue moving higher, hence why we will stay somewhat bullish for now.
Another push higher could break the above-discussed 5503 barrier and open the door to the next potential resistance zone, at 5533. That zone was seen acting as strong support on July 18th and 19th. The price could stall around there, or even correct back down a bit. But as long as it stays above the 5500 area, we will continue to aim north. If the buyers will decide to take advantage of the lower price again, CAC 40 could travel above the 5533 hurdle and target the 5564 level, marked by the high of August 1st.
Our oscillators, the RSI and the MACD, are still showing positive signs. The RSI, although has flattened somewhat, remains above 50 and looks like it could stay there for a while. The MACD is above zero and its trigger line, and continues to point higher. Both indicators seem to be supporting the above-discussed scenario for now.
Alternatively, a price-drop below the 5440 hurdle and the 200 EMA on the 4-hour chart could lead to a larger correction down. This is when we will examine the support area between the 5400 and 5412 levels, marked by the high of August 27th and an intraday swing low of August 29th. The index might stall there initially, but if there are still no buyers at those levels, a further decline may bring CAC 40 closer to the previously mentioned short-term upside line, which may help support the price from moving lower.
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