FTSE 100 & CAC 40 Price Chart Forecasts
- The FTSE 100 has lagged other European equities like the DAX 30, but looks to test resistance nonetheless
- Similarly, the French CAC 40 is narrowly beneath recent highs around 5,672 and could soon test decade highs
- Check out the Dow Jones, DAX 30 and S&P 500 Forecasts for the Week
FTSE 100 & CAC 40 Price Chart Forecasts: Indices Face Resistance
Major Indices have enjoyed a two-fold tailwind from warming US-China trade ties and dovish central bank policy which has allowed them to post gains in September thus far. As it stands, the fundamental landscape lies largely with Wednesday’s FOMC meeting at which the Federal Reserve is expected to cut the Federal Funds rate by 25 basis points. With the FTSE 100 and CAC 40 trading slightly beneath resistance, will they require a fundamental catalyst to break above or drive higher in the coming days regardless?
FTSE 100 Price Chart Forecast
Either way, the FTSE 100 has a perilous path ahead. Continued Brexit uncertainty will likely divert some attention away from monetary policy matters and could keep the Index beneath resistance at 7,367 until loose-ends are tied. The Index could encounter subsequent resistance at the ascending trendline around 7,475 and 7,570.
FTSE 100 Price Chart: Daily Time Frame (January – September) (Chart 1)
Support may exist at the nearby 200-day moving average, which conveniently lies at the at the 7,300 level. Secondary support could enter the fray at the nearby Fibonacci level around 7,200. While the fundamental backdrop faces uncertainty and technical resistance looms, IG Client Sentiment data reveals that traders remain net-short the FTSE 100 which could suggest the Index will continue higher despite the headwinds.
CAC 40 Price Chart Forecast
Unlike the FTSE, the CAC 40 enjoys a relatively stable domestic backdrop. To that end, the French equity Index has enjoyed a steeper climb than its British counterpart and rests slightly beneath recent highs at 5,672. The level will look to resist a continuation higher. If surpassed, the CAC 40 could target levels not seen since 2007 when the Index traded above 6,000.
CAC 40 Price Chart: Daily Time Frame (January – September) (Chart 2)
Thus, subsequent resistance in the event of a bullish break higher could look to materialize around the 5,872 level – the 76.4% Fibonacci retracement from the Index’s high in 2001 to its low in 2003. The level exhibited its ability to influence price in 2007 when it acted as resistance and could look to prove its merit once more. Like the FTSE, retail traders remain overwhelmingly short the CAC 40 – despite its recent track record.
CAC 40 Price Chart: Monthly Time Frame (2000 – 2019) (Chart 3)
Retail trader data shows 19.55% of traders are net-long with the ratio of traders short to long at 4.11 to 1. The number of traders net-long is 37.86% higher than Friday and 5.39% lower from last week, while the number of traders net-short is 0.13% lower than Friday and 6.04% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests the CAC 40 may continue to rise. Yet traders are less net-short than yesterday and compared with last week which could begin to erode the bullish-contrarian signal. For a deeper look at positioning and how to incorporate it in your trading strategy, follow @PeterHanksFX on Twitter or sign up for the Weekly IGCS Webinar Walkthrough.
--Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX