CAC still stuck within tight trading range
CAC 40 Index (CAC) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, CAC finished the week 3.9% higher at 4444.56 after edging lower €0.89 (-0.02%) today. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (CAC as at May 22, 2020):
Friday's trading range has been €106.55 (2.43%), that's slightly above the last trading month's daily average range of €91.41. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for CAC. Prices continued to consolidate within a tight trading range between 4354.73 and 4536.07 where it has been caught now for the whole last trading week.
Two candlestick patterns are matching today's price action, the Bullish Hikkake Pattern and the White Candle which are both known as bullish patterns. The last time a White Candle showed up on Wednesday, CAC actually lost -1.15% on the following trading day.
Unable to break through the key technical resistance level at 4468.52 (R1), the index closed below it after spiking up to 4475.35 earlier during the day. The failure to close above the resistance could increase that levels importance going forward.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Buying might accelerate should prices move above the close-by swing high at 4536.07 where further buy stops could get activated. As prices are trading close to May's high at 4569.76, upside momentum might speed up should the market mark new highs for the month.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Close to Swing High" stand out. Though it is usually interpreted as neutral, it has actually shown to be bullish for CAC 40. Out of 796 times, CAC closed higher 54.15% 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 five trading days, showing a win rate of 55.90% with an average market move of 0.07%.
With four out of the other five Major European Indices closing higher today, the ones that stand out on the positive side are BEL20 gaining 0.75% and TECDAX closing 0.63% higher. On the flipside the worst performer has been FTSE closing -0.37% lower. Read more