Current trend

One of the leading indices of the European economy, the CAC 40, is correcting at 7437.0 amid macroeconomic reporting and the situation on the domestic bond market. 

Data released this week in France reflected a new local trend of rising inflation. The Consumer Price Index rose 0.2% in July after rising 0.1% the previous month, helping push the annual rate up to 2.3% from 2.2%, and could mean that the European Central Bank (ECB) will keep interest rates high in the long term, keeping business debt burdens high.

The index has already lost more than 800 points from its peak of 8200 points in May and, if not for the correction in the bond market, this decline would continue now. The yield on 10-year bonds fell to 2.981% from a peak of 3.273% in early July, on 20-year bonds — to 3.310% from 3.549%, and on 30-year bonds — to 3.513% from 3.734%.

The growth leaders in the index are Accor SA ( 3.35%), Stellantis NV ( 2.48%), STMicroelectronics NV ( 2.38%).

Among the leaders of the decline are Eurofins Scientific SE (–3.62%), Orange SA (–0.58%), Danone SA (–0.36%), Engie SA (–0.06%).

Support and resistance

On the daily chart, quotes continue a local correction, having come even closer to the resistance line of the descending channel with boundaries of 7490.0–7100.0 the day before.

Technical indicators weaken the downward signal, accelerating more actively: fast EMAs on the Alligator indicator are approaching the signal line, narrowing the range of fluctuation, and the AO histogram, being far from the transition level, forms ascending bars.

Support levels: 7370.0, 7110.0.

Resistance levels: 7490.0, 7700.0.

Trading tips

In the event of a reversal and continued growth of the asset, as well as price consolidation above the resistance level of 7490.0, long positions with a target of 7700.0 and a stop-loss of 7420.0 will be relevant. Implementation time: 7 days and more.

If the asset reverses and declines and the price consolidates below 7370.0, short positions can be opened with the target at 7110.0. Stop-loss — 7500.0.