Talking Points:
- CAC 40 and European Equities Markets Await the ECB
- Daily Resistance May be Considered at 5,284.30
- Looking for additional trade ideas for equities markets? Read our 2017 Market Forecast
The CAC 40 has been quiet for the last two trading sessions, after the Index initially traded to new 2017 highs to start this weeks trading. This has been a recurring theme around European markets, as international equities markets await Thursday’s ECB (European Central Bank) rate decision. Expectations are set to leave rates flat at an effective 0.00%, however this event is likely to produce volatility in markets.
Traders following the CAC 40 should note that the Index is currently trading down -0.12% for Wednesdays trading. Top leaders for the session include Kering (+8.70%) and Vivendi (+1.87%). Top Losers for the Index include both ArcelorMittal (-1.80%) and BNP Paribas (-1.76%).
CAC 40, Daily Chart with 10 Day EMA
Technically, the CAC 40 has backed off from its standing 2017 high at 5,362.30 to now trade back below a value of previous technical resistance. 5,284.30 is represented graphically as the April 2015 high, and a daily close below this point may at least temporarily put the ongoing CAC 40 uptrend into question. If prices continue to decline, traders should next look for the Index to challenge its 10 day EMA (exponential moving average), which is found at 5,173.56. Alternatively if the CAC 40 rallies later in the week, traders should first look for prices to close back above 5,284.30. In this bullish scenario, the April 2015 high would again be considered a value of support as trader target new yearly highs.
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Traders tracking market sentiment should note that IG Client Sentiment (IGCS) for the CAC 40 (Ticker: France 40) remains at extremes. Currently IGCS stands at -3.67 with only 21.4% of traders net long the Index. When taken as a contrarian signal, this extreme negative value suggests that the CAC 40 may continue to trader higher. In the event that the CAC 40 declines in upcoming sessions, traders may look for sentiment totals to move away from its current extremes back towards more neutral values.
— Written by Walker, Analyst for DailyFX.com
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