CAC breaks below key technical support level
CAC 40 Index (CAC) Technical Analysis Report for Jul 17, 2019 | by Techniquant Editorial Team
CAC finished Wednesday at 5571.71 tanking €42.67 (-0.76%). This is the biggest single-day loss in over a month. Trading €18.96 higher after the open, the index was unable to hold its gains as the bears took control ending the day below its opening price. Closing below Tuesday's low at 5573.36, CAC 40 confirmed its breakout through the prior session low after trading up to €4.68 below it intraday.
Daily Candlestick Chart (CAC as at Jul 17, 2019):
Wednesday's trading range has been €52.53 (0.94%), that's above the last trading month's daily average range of €40.52. Things look different on the weekly timeframe, where the market's trading range of the last week has been below the market's average weekly trading range. The longer-term, monthly volatility is currently notably lower than usual for CAC.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 5538.30 (S1). Prices broke below the key technical support level at 5593.60 (now R1), which is likely to act as resistance going forward. The last time this happened on May 23rd, CAC actually gained 0.67% on the following trading day. After having been unable to move lower than 5573.36 in the previous session, the CAC found buyers again around the same price level today at 5568.68.
Though the market is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Selling might speed up should prices move below the nearby swing low at 5550.86 where further sell stops could get triggered. With prices trading close to this year's high at 5629.79, upside momentum might accelerate should the stock index be able to break out to new highs for the year.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Closed below last periods low" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for CAC 40. Out of 398 times, CAC closed higher 52.01% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 61.56% with an average market move of 0.80%.
With five out of the other five Major European Indices closing lower today, the ones that stand out on the negative side are DAX losing -0.72% and BEL20 closing -0.64% lower. None of the markets managed to end the day in the green. Read more