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The CAC40 shaded off some of its weekly gains as bullish momentum stalls post-President Emmanuel Macron’s indication that the government may have to nationalize “certain energy companies” a month before France’s next elections.
The index slid lower losing -0.91% during the European session as geopolitical risks renew in the Eurozone as diplomatic talks between Russia and Ukraine fail to reach a consensus in the near term.
In the markets eye now is President Biden’s call with China’s Xi in a bid to ratchet pressure on China to condemn Russian aggression towards Ukraine. The outcome should dictate the next price move here.
In reality, the CAC40 index remains underpinned by the negative auto sector in the near term as the economy battles to recover from COVID19 effects amid the war cloud.
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The CAC40 bounced off a critical pivot at 6601.00 resistance early European session. The bullish trend stalled on Thursday after rising for 3 consecutive sessions as the index takes a breather.
A failure to break above that near-term resistance at 6601.00 may cause a selling pressure in the near-term towards 6403.00 or further towards 6300 psychological support.
The trend is currently bearish, capped up a 50-day moving average which is used as a dynamic resistance or support by traders.
However, a break above 6601.00 near-term resistance may give room for growth towards 6800.00 resistance which coincides with the 50-day moving average.
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Looking at the 4-hour chart, the bullish trend indicates trend exhaustion as the RSI hits the overbought area. There is a possibility that the index may experience price retracements in the near term towards 6403.00 support.
However, looking at the Williams Alligator, the price continues to bounce on top of the dynamic support areas, hence a break above 6600.00 may give room towards pre-war levels at 6800.00.
