Best of the Week
Most Popular
1.UK House Prices BrExit Crash NOT Likely Despite London Property Market Weakness - Nadeem_Walayat
2.BrExit Morning - New Dawn for Britain, Independence Day! - Nadeem_Walayat
3.LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - Nadeem_Walayat
4.BrExit Implications for UK Stock Market, Sterling GBP, House Prices and UK Politics... - Nadeem_Walayat
5.Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - Nadeem_Walayat
6.FTSE and Sterling Brexit Trading, Deconstruction of the EU Referendum Result - Nadeem_Walayat
7.UK Interest Rate Cut to 0.25% Imminent and More QE Money Printing - Nadeem_Walayat
8.Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - Nadeem_Walayat
9.The Stock Market is Reading it Wrong! - Chris_Vermeulen
10.Breakouts Galore in Gold and Silver - Jordan_Roy_Byrne
Free Silver
Last 7 days
Retirees Are Risking Their Life Savings on Junk Bonds - 29th July 16
The Next Recession is Coming - Expect Around 0% Returns for the Next 7 Years - 29th July 16
SPX is Shaking and Rolling - 29th July 16
Stock Market Insiders Are Secretly Selling, Cycle Top Next Month - 28th July 16
FOMC Interest Rates and Their Impact on the US Economy - 28th July 16
The State Of The Economy - 28th July 16
Elliott Wave Crash Course - 3 Ways the Elliott Wave Principle Enhances Your Trading - 28th July 16
Japan's "Helicopter Money" Play: Road to Hyperinflation or Cure Debt Deflation? - 27th July 16
Monetary Zika - The Insidious Nature of Credit Expansion - 27th July 16
Gold and Pork Bellies - 27th July 16
Silver Is Insurance Against The Worst Part Of This Depression - 27th July 16
Don’t Buy The SPX Hope Stock Market Rally! - 27th July 16
Bitcoin $650 Still in Play - 26th July 16
Deutche Bank Stock Price Crash - The EU Has Problems Far Beyond the Brexit - 26th July 16
The Forex Markets Are Getting Exciting! - 26th July 16
Underpriced Silver Is the “Rip Van Winkle” Metal - 25th July 16
Declines in Multiple Market Indexes - 25th July 16
Retailers Are Doomed as Most Americans Are Too Poor to Shop - 25th July 16
Here’s One Currency That Could Go to Zero - 25th July 16
Stock Market Top is Expanding - 25th July 16
Silver Manipulation – Because They Needed the Eggs - 25th July 16
Silver Market COT Stuns: What's Going On Here? - 24th July 16
Gold Demand Remains Stable During Sector Weakness - 24th July 16
Sernova, Diabetes and Haemophilia - 24th July 16
Russia: Tensions, Turmoil, and Western Hubris - 24th July 16
Soybean Commodity Price to Soar Again - 23rd July 16
SPX Stock Market Uptrend Continues - 23rd July 16
Gold And Silver – Debt Addiction Will Carry Precious Metals Higher, Guaranteed - 23rd July 16
Pokemon Go - How to Play, First Use, Balls, Stops, Catching Pokemon's... Great Excercise! - 23rd July 16
7 Signs That the Gold Market Remains Resilient - 23rd July 16
Basic Income in The Time of Crisis - 23rd July 16
Silver Bull Faces Correction - 22nd July 16
The Serious Warning No One’s Talking About - 22nd July 16
Stock Market Insight from Greed, Volatility, and Put/Call Ratio - 22nd July 16
What Will Happen To the Stock Market When Interest Rates Rise? - 22nd July 16
How to Escape the World’s Biggest Ponzi Scheme - 22nd July 16
Addicted to Debt - We Can’t Borrow from the Future Anymore - 21st July 16
Not Everything Is Bullish for Gold - 21st July 16
Don’t Get Sucked Back Into the Stock Market - The Big Picture Hasn’t Changed - 21st July 16
Silver – Caught Inside - 21st July 16
Forex: "The Markets Are Getting Exciting!" - 20th July 16
China Economic Troubles - Is Kyle Bass Finally Getting His Revenge? - 20th July 16
Why Lithium Will See Another Price Spike This Fall - 20th July 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Power of the Wave Principle

France CAC40 Stock Market Technical Outlook

Stock-Markets / European Stock Markets Feb 13, 2016 - 06:25 PM GMT

By: Austin_Galt

Stock-Markets

The French stock index, the CAC40, has traded more or less as outlined in analysis produced back in May 2015. That analysis called the top in place and outlined expectations of a bear market to play out.

Price hit a low this past week at 3892 which was just over 26% down from the May 2015 high and I believe that may well represent the final low to the bear market.


Let's take a top down approach to the analysis beginning with the monthly chart.

CAC40 Monthly Chart

CAC40 Monthly Chart

I showed this chart back in May 2015 using the same bullish and bearish Fibonacci Fans to identify the 2015 high so let's revise them.

The bullish fan drawn from the 2009 low shows the 2015 high bang on resistance from the 76.4% angle while price is now back at support from the 88.6% angle.

The bearish fan, drawn from the 2000 high, shows the 2015 high at resistance from the 76.4% angle while price is now just above support from the 61.8% angle.

I have added Fibonacci retracement levels of the move up from 2009 low to 2015 high and the recent low was right around support from the 50% angle which keeps the uptrend in a relatively strong position, assuming this is the low of course.

The Bollinger Bands show the 2015 high traded above the upper band while the current low has traded well below the lower band. This characteristic is a common feature found at solid highs and lows.

The RSI is oversold while the MACD indicator is still bearish so caution still needs to be heeded but I believe conditions on the monthly chart are certainly conducive to a resumption of the uptrend.

CAC40 Weekly Chart

CAC40 Weekly Chart

The upper horizontal line denotes the 2011 high of 4169 and price has dipped under this level as it gives that support a thorough test.

The lower horizontal line denotes the 2014 low of 3789 and price turning back up above this level effectively puts in the next higher low thereby keeping the overall uptrend intact.

I have drawn three Fibonacci Fans but have excluded some unimportant angles to keep the picture uncluttered. Let's run through them.

The bearish fan drawn from the 2007 high shows the 2011 low at support from the 61.8% angle. The 88.6% angle provided solid resistance all throughout 2014. Once price eventually cracked above this 88.6% angle it became support and price has just dipped back under this angle as it gives the support a good test. I expect a bounce back above the angle imminently.

The bullish fan drawn from the 2009 low shows the 2015 high at resistance from the 50% angle. The 2011 low was bang on support from the 88.6% angle while the current low is bang on support from the 61.8% angle.

The bullish fan drawn from the 2011 low shows the 2014 low bang on support from the 50% angle while the current low is bang on support from the 61.8% angle.

So, there is clearly some excellent symmetry going on and it adds confidence that we may well have a solid low in play here.

The RSI is oversold with a bullish divergence showing at this price low while the MACD indicator is bearish although price turning back up would see that change fairly quickly.

Let's wrap it up with the daily chart.

CAC40 Daily Chart

CAC40 Daily Chart

I have drawn two bearish Fibonacci Fans - one from the 2015 high and one from the major secondary high. Both show the current low being right around support from the 88.6% angles from both fans. Nice.

The Bollinger Bands show price threatening to leave the lower band but until that happens it is still possible to push a touch lower or at least test the low.

The RSI shows a triple bullish divergence in place which often leads to a significant price rise while the MACD indicator is bearish although the averages do appear to be coming together with the potential for a bullish crossover shortly.

The two horizontal lines denote resistance from previous swing highs and price needs to bust above here to confirm the low is indeed in place.

Summing up, I have been bearish since my previous analysis called the bull market high back in 2015. I am now changing the outlook back to bullish with the expectation that a new bull market is about to begin.

By Austin Galt

www.thevoodooanalyst.com 

Austin Galt is The Voodoo Analyst. I have studied charts for over 20 years and am currently a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts, there seemed to be a dearth of technical analysts. My aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.

Email - info@thevoodooanalyst.com 

My website is www.thevoodooanalyst.com 

© 2016 Copyright  The Voodoo Analyst - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Austin Galt Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife