What’s inside:
- ECB outcome resulted in euro strength and small pressure on European equities
- DAX remains capped below 12300 on a closing basis, very important threshold for outlook
- CAC 40 is also having its struggles as it remains trapped in a bearish channel
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Yesterday, the ECB met and the resulting strength in the euro did no favors for major European equity markets. Both the DAX and CAC were unable to climb to climb above significant resistance levels. Actually, at one point the German index traded to its best levels since July 21, but on a closing basis (which is what really matters) it failed and put in a small reversal bar. We’ve been discussing the area around 12300 for a good amount of time now, as it continues to be a headwind for the longs. Stay below and the outlook continues to be neutral to bearish. With a clean close into the mid-12300s and move above yesterday’s high at 12363 and our tune will change.
DAX: Daily
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Since the election outcome in France the CAC 40 has grinded its way lower in a tight bearish channel with euro strength putting pressure on the market. It’s been a long, slow grind for sure. Towards the very end of last month, the market dropped to the low-end of the channel where a retest took place of the trend-line running down off the 2000 highs over the 2007 and 2015 peaks. Yesterday, the CAC turned lower from the top of the channel and as long as it remains in its confines, then like the DAX the outlook remains neutral to bearish. A clean break above will likely coincide very closely with a breakout above 12300 in the German index, at which time focus can shift higher.
CAC 40: Daily
—Written by Paul Robinson, Market Analyst
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