Thursday, April 2, 2020 4:59 PM EDT
The CAC 40 moved lower on Thursday as it backed off resistance around 4,500. Despite Thursday’s price action, the bullish break above the 2018 low is an encouraging development for bulls looking to continue the run higher in the weeks ahead. In the meantime, price action would suggest traders are apprehensive stocks can continue higher. At this stage, consolidation above the recent swing-low on March 19 may actually be a healthy development in pursuit of a longer-term recovery rally.
CAC 40 Price Chart: Daily Time Frame (March 2018 – April 2020)
(Click on image to enlarge)
Therefore, the nearby Fibonacci level at 4,140 offers bullish traders an early opportunity to keep price afloat before the swing-low and subsequent Fibonacci level are required. Should the outlined levels fail, a lower low would be established, and the CAC 40 would be more vulnerable to further losses. On the other hand, consolidation above 3,528 would suggest investors are comfortable with the resultant valuation, providing cause to explore bullish opportunities.
In the meantime, however, IG Client Sentiment data suggests the CAC 40 may fall further before it can continue higher once more. Ideally, a deeper pull back and consolidation above the 3,528 level might provide a more attractive risk-reward profile for exploring topside opportunities, but price action rarely unfolds so cleanly.
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