CAC 40 Index Forecast December 3, 2012, Technical Analysis

The CAC 40 Index had initially tried to gain during the Friday session, but was repelled at the €3600 level yet again. Because of this, we formed a shooting star at the top of a large consolidation area. It simply looks like the market is not ready to break out and we could be falling back to the €3500 level in relatively short order.

The market has been consolidating for several months now, and with it being December, it’s very unlikely that we will have a sudden surge in interest to buy stocks. However, anything is possible and we will be watching the €3600 level as a possible launching point of buying.

On the downside, we see the €3500 level as a potential support area, but if it does get broken down, we could see this move back down to the €3350 level again. If that’s the case, there is definitely going to be a nice shorting opportunity as the market is so well-defined right now. You have to keep in mind that there are a lot of people out there looking at the same “obvious trade”, and as such once we start to fall this really could pick up some steam.