Talking Points:
- CAC 40 Falls From Highs Post Election
- Sentiment Shifts From Extremes; IG Client Sentiment -1.39
- Looking for additional trade ideas for equities markets? Read our 2017 Market Forecast
The CAC 40 is reversing lower this morning, after initially rallying to new highs on the conclusion of the final round of the 2017 French presidential election. Yesterday’s election saw Emmanuel Macron defeat Marine Le Pen. With this news now being priced into the market, CAC 40traders will next look to ECB President Draghi’s speech on Wednesday to provide direction for European shares. So far for Monday’s trading, the CAC 40 is down -0.83%. Leaders for the session include Unibail-Rodamco (1.79%) and Carrefour (+0.51%). Top Losers for today’s trading include both Schneider Electric(-4.77%) and LafarageHolcim (-4.53%).
CAC 40, Daily Chart with 10 Day EMA
Technically despite today’s decline in price, the CAC 40 remains in an uptrend. Currently the Index remains above its 10 day EMA (exponential moving average at 5,341.22 and its 200 day MVA (simple moving average) at 4,791.89. At present, the 10 day EMA may be considered as a value of support if the CAC 40 continues to trend higher. If the Index remains supported above 5,341.22 this week, traders may look for the CAC 40 to breakout to new 2017 highs above 5,498.90.
With prices moving lower to start trading this week, traders looking for a reversal in the CAC 40 should first look for prices to trade below 5,341.22. A breakout below the displayed 10 day EMA would suggest that new bearish momentum is returning to the market. In this bearish scenario, traders may look for the Index to trade back towards key technical lows. This includes the standing May low at 5,243.60 and then the April 24th low at 5,158.50.
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Sentiment figures for the CAC 40 (Ticker: France 40) have shifted significantly from last week’s extremes. IG Client Sentiment (IGCS) now reads at -1.39, with 41.9% of traders net-long the Index. This is a significant shift from last Thursday’s reading of -2.93. If the CAC 40 continues to decline, traders should look for sentiment to neutralize further and potentially flip to a positive reading. Alternatively if the CAC 40 finds support, sentiment is likely to shift back towards negative extremes on new higher highs.
— Written by Walker, Analyst for DailyFX.com
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