The CAC40 is looking increasingly bullish after the leading French index hit a record high Tuesday as investors moved back into a buying mood again following last month’s scare over the global banking sector.
On the back of the new record high, it actually marked the largest one-day point and percentage gain since Thursday, March 30, 2023.
Technically the CAC40 looks very bullish as it trades higher for two consecutive trading days. Month-to-date the CAC40 is up 0.93%, and Year-to-date it is up 916.52 points or 14.16%
It was also the largest two-day point and percentage gain since April this year. On a year-to-date basis, the CAC40 is up over 13 percent and the CAC40 is higher by 30 % from its 52-week low.
Some consolidation may be seen today head of the release of US CPI and the FOMC meeting minutes. A low US CPI number could be bullish for global stocks.
Sentiment towards the CAC40 is extremely bearish according to the ActivTrader market sentiment tool. This could be a sign that a further price rally is ready to happen.
We probably need to see sentiment turn bullish before a big correction takes hold, as retail traders are typically on the wrong side of the market.
The CAC40 is breaking to a new all-time high, and pattern wise the CAC40 is very bullish as it ignites an inverted head and shoulders pattern.
Looking at the Ichimoku indicator four-hour time frame chart, it is very clear that the CAC40 is bullish due to the breakout and strong buy signals in place. 7,500 looks to be the next upside target.
H4 Time Frame Chart
Looking at the daily time frame bulls need to hold the price above the 7,383 level to move the CAC40 away from the correction danger zone, and if this support level holds the CAC40 could power ahead towards the 8,000 level.
Daily Time Frame Chart
The fact that the CAC40 continues to hold onto psychological support from the former all-time high, amidst the combination of heightened price volatility and risk aversion, is a good sign.
