This level could be the bottom for French stock market

by Alistair Strang from Trends and Targets |

The CAC 40 is off the boil this month, but our chartist has spotted where a real bounce should occur. 

CAC 40, France 

Unlike Germany, the French index has not (yet) made a commitment for serious reversal. Don't be lulled into a false sense of security though, as France rarely misses any opportunity for amateur dramatics.

At present trading around 5,363, it needs below 5,250 to suggest trouble awaits anytime soon.

Below 5,250 and we're looking at the potential for reversal to 4,990 with secondary if (when) broken at 4,780 and ideally a rebound.

The secondary should donk against the uptrend since 2011, this alone giving ample reason for a recoil.

We do, however, have a problem with the secondary thanks to several opening second manipulation gaps.

These gaps in logic mean "bottom" could actually be 4,728 points and this gives a large problem, breaking the historical uptrend.

To cut a long story short, it moves the price into a region where the "real bottom" calculates down at 3,855 points.

Visually, this unfortunately makes sense given historical dips and thus solidifies 3,855 as the point at which a real bounce should occur.
 
Importantly, this is presently a scenario which has not come close to triggering.

As mentioned, the index requires break below 5,250 to tick the first box in a path which holds quite a lot of misery.

We shall be interested, if the index can somehow exceed 5,406 points anytime soon. Allegedly, if the price breaks above such a level, we can calculate 5,508 as our first ambition. If exceeded, secondary computes at 5,630, along with almost certain hesitation.

Source: Trends and Targets      Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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