French CAC 40 Locked in Rectangle Pattern Since June

By Tomasz Wisniewski|

Published: July 11 2024, 08:32 GMT+0

French CAC 40 Locked in Rectangle Pattern Since June

In today’s technical analysis, let’s take a closer look at the French CAC 40, which has been relatively stagnant since the recent elections. Despite expectations, the index has been confined within a narrow range, forming a sideways trend, or rectangle, that has persisted since June 14th. This range is delineated by a resistance level around 7,750 points and support at 7,490 points.

This lack of movement indicates a struggle to break free from this pattern, yet once a breakout occurs, it could provide a significant trading signal. If the price breaks above the rectangle, it would signal a buy, targeting the blue resistance level, which represents the neckline of a double top formation from March and May. However, this buy signal might be short-lived given the resistance strength.

Conversely, a breakout below the rectangle’s support would signal a sell, potentially leading to a more extended decline. Despite the current bullish market sentiment, particularly compared to American indices, European indices like the CAC 40 are lagging, which might hint at a possible downside breakout. Yet, traders should wait for a definitive breakout from this rectangle to confirm the next move.