This morning, after failing to test the highest point of November, at 5966, the index quickly took a dive and is now showing willingness to drift further south. But in order to get comfortable with slightly lower areas, we need to see a price-drop below the low of November 21st, at 5833. Only then we may target the downside, which could still be part of a larger correction, as CAC 40, overall, continues to trade above its medium-term upside support line drawn from the low of August 15th. For now, we will stay neutral and wait for a break of one of the highlighted areas on the chart, before examining a further short-term directional move.
If today’s slide continues, the index drops and closes below the 5833 hurdle, which is the low of November 21st, this may set the stage for a possible move to the 5782 zone. That zone is marked near the high of October 31st and near the low November 4th. If that area is still not able to withstand the bearish pressure, its break could lead CAC 40 to the 5716 level, marked near the lows of October 30th and 31st.
Our oscillators, the RSI and the MACD, started pointing lower, after topping around mid-November. The RSI is pushing for a potential test of the 50 mark and the MACD continues to run below its trigger line, while pointing to the downside. That said, the indicator is still running above zero. Our two momentum studies support the idea of staying neutral, at least for now.
If the price suddenly climbs above the 5966 barrier, which is the highest point of November, this would confirm a forthcoming higher and more buyers could take this opportunity to join in. We will then target the 5996 area, or the psychological 6000 mark, a break of which may clear the way to the 6080 level, which is the high of July 19th, 2017.
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