CAC40 Draws Closer to Triangle Resistance

FX:FRA40   CAC 40 Index
110 1 1
Talking Points
• The CAC40 rallies in an ascending triangle
• Point and figure resistance is found at 5,185
• A 3box reversal would represent continued consolidation

The CAC40 ( FRA40             ) is breaking out to new November highs this morning, and can now be seen attempting to challenge the psychological 5000 pricing level. The CAC40’s current advance is well represented in the point and figure graph point and figure graph above, which began after a 3 box reversal from support represented by the established August 2015 lows. While the Index continues to push towards higher highs, it should be noted that the CAC40s’ current rally is part of a broader ascending triangle pattern. Support has been created by connecting a series of points, including the August 2015 lows, to create an ascending trendline . Resistance has alternatively been created by connecting a series of highs on the point and figure chart at 5,185. As price draws closer to resistance, traders can begin to use these values to plan for potential trading opportunities.

In the event that the CAC40 continues to rally towards resistance, there are two distinct opportunities available for traders. First, traders looking for a breakout, will wait for price to plot a new bullish point above resistance. This will allow traders to enter the market on the creation of a new 2015 high. Conversely, if prices fail to breakout, traders may select to trade the continued consolidation of the Index. This would be represented by a new 3 box reversal, on a point and figure chart. After a price rejection at resistance, and a new bearish plot would be significant as it would allow traders to begin targeting values along the previously mentioned ascending trendline .
For more info on trading point and figure charts check out this link.

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