CAC 40: On very fragile graphic levels

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(News Bulletin 247) – “It’s the start of a Russian invasion in Ukraine”, says now very clearly Joe Biden, who in the process announced a first wave of sanctions against Moscow. As a reminder, While the possibility of a summit between Biden and Putin would have been quickly showered by the latter, who considered the option “premature”, the Kremlin is now close to the Rubicon: it recognizes, by openly supporting the separatists in the Dombass, the independence of two regions of this eastern part of Ukraine, which constitutes an additional step in the escalation, and further materializes the entry into a new Cold War with the West. The CAC 40, at the end of a once again very volatile session, closed very slightly in the red, close to equilibrium at 6,787 points, in the immediate vicinity of a support graphic zone of a large fragility. Wall Street, which reopened after a public holiday on Tuesday, saw red dominate the proceedings.

The UN and a majority of members of the Security Council, led by the United States, vigorously denounced Moscow’s decision to recognize the independence of the breakaway republics in eastern Ukraine and to “deploy troops Russians”. Even China is taking a stand by calling on the actors of the crisis to “show restraint”.

In terms of statistics, note the publication of the IFO business climate index in Germany, which came out above expectations at 98.9. As well as flash PMI (IHS Markit) significantly above expectations in the United States regarding the very first estimates for the current month. A reassuring indicator, the consumer confidence index (Conference Board) emerged at a firm level, boding well after worrying measures of consumer morale according to the work of the University of Michigan (U-Mich).

On the values ​​side, the rating was also driven by a last burst of quarterly results, more or less well received depending on the files, like Wordline (+10.52% to 47.415 euros), Eurofins Sc. (-0, 31% to 86.19 euros), or Plastic Omnium (-2.27% to 19.76 euros).

On the other side of the Atlantic, the main equity indices ended Tuesday’s session, the first of the week, in the red, like the Dow Jones (-1.42% to 33,596 points) or the Nasdaq Composite (-1.23% to 13,381 points. The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted by 1.01% to 4,304 points.

A point on the other risky asset classes: around 08:00 this morning on the foreign exchange market, the single currency was trading at a level close to $1.1320. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $91.60.

To follow as a priority, on the agenda this Wednesday, the consumer price index in the Euro Zone at 11:00 am.

Please note, for holders of positions on the RD: the monthly liquidation will take place at the close of the day’s trading session. This Wednesday, February 23 therefore marks the last trading day for SRD orders for the current month.

KEY GRAPHIC ELEMENTS

An oblique line of support gave way on Monday 02/14 under the sectorally federated assaults of the selling side, in a very high level of participation. This release of selling energy at this stage, in a single session (24/01), constitutes a major technical fact which characterizes the hypersensitivity of a market which is increasingly and continuously questioning the levels of valuation of shares. .

The entry into the bear market is not formally characterized, but the situation calls for the greatest vigilance under this slant. She was reinstated at the very end of the week. We put her under close surveillance. In the immediate future, plotting a wedge in hourly data is not very engaging. The three-color flagship index came out on Thursday, from below, in accelerating volumes, before starting to rise again. A definitive exit from the bottom of this bevel is the preferred option. The break, on a very wide gap on Monday 02/14, is a first decisive step. This gap was almost entirely filled on Tuesday, in the form of a school pullback, in decreasing volumes.

The index has plotted a combination of candles in three crows*. This combination was immediately followed by a very significant bearish engulfing structure, accompanied by volumes that were far from timid for a session, let’s not forget, without American benchmarks. The looming scenario is now that of a new test of 6,760 points, an increasingly fragile technical floor.

* All 3 candlesticks close at or near their lows AND each open must be inside the body of the previous candle.

FORECAST

In view of the key graphic factors that we have mentioned, our opinion is negative on the CAC 40 index in the short term.

This bearish scenario is valid as long as the CAC 40 index is trading below the resistance at 7036.00 points.

Hourly data chart

CAC 40: On very fragile graphic levels (©ProRealTime.com)

Chart in daily data

CAC 40: On very fragile graphic levels (©ProRealTime.com)

©2022 News Bulletin 247

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