Talking Points
- The CAC40 is set to close inside Fridays price action
- Reference resistance is set at 4,950
- Current ATR sets bullish projections to 4,904.21
Like many indicies around the world, the CAC40(FRA40) is hovering near new highs for the month of October. The index has experienced a fresh round of bullish momentum based on the most recent statements from the ECB suggesting that the central bank may exapand their current QE program. However, after Thursdays initial breakout and Fridays continuation, the CAC40 can be seen consolidating to start this weeks trading.
FRA40 1Day Chart
(Created using TradingView Charts)
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As seen above, the CAC40 (FRA40) is set to close Monday’s trading with the formation of an inside bar pattern. This formation is indicative of market consolidation, and is created using Fridays candle as a reference for values of support and resistance. Support is identified using Fridays low at a price of 4,822. Resistance is found using Fridays high at a price of reference of 4,950. With prices closing “inside” today, traders may begin preparing for a breakout later in the week.
In the event that the market breaks through either support or resistance, traders may use ATR to plan their projections for the index. Currently 1X daily ATR reads at 82.21 which will place bullish projections at a price of 4,904.21. Conversely, if prices break through support at 4,822, traders will begin to project prices towards a value of 4,739.79 on fresh bearish momentum.
Alternatively, if prices fail to breakout, it may signal continued consolidation for the CAC40 along with other indices. In this scenario, any breakout of support or resistance may be delayed. Traders may continue to wait for a breakout in this scenario, or opt to look for new range based positions based off of the markets current conditions.
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