CAC falls to lowest close since June 1st
CAC 40 Index (CAC) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, CAC ended the month -3.09% lower at 4783.69 after losing €69.25 (-1.43%) today. Today's close at 4783.69 marks the lowest recorded closing price since June 1st. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 4801.02, the index confirmed its breakout through the prior session low after trading up to €17.33 below it intraday.
Daily Candlestick Chart (CAC as at Jul 31, 2020):
Friday's trading range has been €119.21 (2.45%), that's far above the last trading month's daily average range of €73.95. 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.
Two candlestick patterns are matching today's price action, the Bearish Closing Marubozu and the Black Candle which are both known as bearish patterns.
Unable to break through the key technical resistance level at 4902.06 (R2), the CAC closed below it after spiking up to 4902.90 earlier during the day. The failure to close above the resistance might increase that levels significance going forward. When prices bounced off a significant resistance level the last time on August 2, 2019, CAC lost -2.19% on the following trading day.
With another close below the lower Bollinger Band, prices are confirming their strong downward momentum in the short-term. A rally back into the Bollinger Band on the next trading day although could signal a potential change in momentum that might lead to a correction back up towards the center of the Bollinger Bands at 5000.70.
While the stock index is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Further selling might move prices lower should the market test June's nearby low at 4691.81.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close below the lower Bollinger Band" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for CAC 40. Out of 166 times, CAC closed higher 56.02% 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 62.65% with an average market move of 0.71%.
With four out of the other five Major European Indices closing lower today, the ones that stand out on the negative side are BEL20 losing -2.01% and FTSE closing -1.54% lower. On the flipside the best performer has been TECDAX closing 0.42% higher. Read more