The CAC 40 index has been restricted to a trading range for nearly three weeks. Today it closed at the upper end of the range to 4,551.5, adding 0.91%. Turning to other major European indices, in Germany the DAX 30 experienced a more modest gain of 0.36% to close Tuesday’s session at 10620.5, while in London the FTSE 100 lost 0.40% to 6,772.
Breadth was strong as 34 of the 40 constituents closed higher for the day. Leading all advancers was Kering SA (KER: PAR), which added 2.48% to close at €204.35. The biggest loser was Technip SA (TEC: PAR), shedding 1.54% to €62.03.
The chart of the CAC 40 remains difficult for traders to get a grasp on as see-saw price action keeps the index confined within about a 100-point range. If the French index is to continue higher out of its range it will need to trade above 4,600, which will also put it beyond the larger range it has been unable to break since late summer. Moving averages are supportive at this time as the index trades above all major levels. The 20 and 50-day MAs have contained weakness and are looked to as critical support moving forward. Also supporting the lower portion of the trading range is the 50% Fibonacci retracement of the rally following the surprise outcome of the US presidential election.
A decline below 4,473 would be considered a bearish occurrence and warn investors and traders of a potential breakdown towards the lows of the multi-month range near 4,300.
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