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CAC 40: Last Chance for Tempting Reasons, Enter or Exit?

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Elliot Wave Analysis for CAC40

CAC 40 is the stock market index of France consisting of the 40 largest listed companies, based on their market capitalization. The index among the 100 largest market capitalization listed companies in Paris belongs to the Euronext Group, which we mentioned in our article for analyzing the AEX index. It was introduced in 1987 with a base of 1000 points.

The most repeatable categories of the industries contained within the index are Industrials, like Constructing, Engineering, Equipment & Electrical components, Aerospace, and Multi-utilities, Financial Services, Technology, Healthcare, Communication Services, Banking, Real Estate, and Automotive manufacturing.

The CAC 40 is traded at 6013,88 points, having made its all-time high at 7384, 86 in January 2022. The all-time low was at 893,82 points in January 1988.

Monthly Range: Higher in wave V

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The monthly trading chart (log scale) tells us that the index exceeded the high at 6944,77 points from the end of the III Cycle wave at the beginning of the crisis in 2000 – 2003, after so many years. The IV Cycle wave took about 17 years to be completed, so now we are inside the final V Cycle wave. This is justified by the fact that the index broke the upper trendline of the contracting triangle of the IV Cycle. Against 3632,06 points, this sub wave is the first leg of the (1) Intermediate of the ((1)) Primary of the V Cycle wave.

Weekly Range: Higher in wave 5 of (1)

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            And indeed, after the ending point of the IV Cycle wave, the index sharply moved to the uptrend with an unfolding impulse as of 1-5 Minor degree waves. The 4 Minor maybe is unfinished, because here from that chart we cannot see any 3-wave downward sequence. Additionally, according to the Elliot Wave Principle’s guidelines, between the second and the fourth wave of the same degree is applied the alternation, which means that if the second formed a sharp correction, then the fourth will be a sideways correction, and the opposite.

            Thus, if within the uptrend basic scenario, the 4 Minor of the (1) Intermediate of the ((1)) Primary of the V Cycle wave hasn’t been completed yet then, the drop will be continued further until the market finds an important support point.

            However, if the declining scenario prevails then, we should expect a tremendous dropdown which maybe would exceed the 3632,06 points. But, without provoking any misunderstanding, we consider that so far, the market reacts depending on the global news, like the other global indices. Hence is more preferable the upward scenario than the downward one.

Daily Range: Higher in wave ((iii)) of 5 of (1)

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            Being into the daily trading chart (log scale), we can see closer the end of the hypothetical ending point of the 4 Minor wave at 5756,38 points. It reached there with a 3-wave sequence. After that, it rallied and found a resistance level at 6000 points, and again it fell where is now.

Hence, 2 scenarios emerge within the downward scenario. In the first sub-scenario we believe that with the 3s we have already seen, the index wants to hit a flat, so we expect an upward movement near the high of the 3 Minor since the flats have a structure of 3-3-5. In the second sub-scenario, there is the case that we are in a 5-wave mode impulse – the fifth is unfinished yet -, and therefore it will become a zigzag with structure 5-3-5 as of an ((a)) – ((b)) – ((c)) Minute waves, constructing the 4 Minor.

We suggest to stay alarmed for any important breaking level, and you will be conducted with a new market forecast for any changes in the wave counting, as quickly as possible. 

See More Analysis for global indices section 1:

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Written by Trade Zign

TradeZign (TZ) is a market forecasting firm,TZ's 10 full-time analysts cover every major market (commodities, stocks, energy, bonds, metals, currencies).

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