CAC40 Technicals: Breach of support at 3390 could see bear move
I think the CAC40 has some very interesting and straight forward technicals that could be used for trading on various timeframes.
Prerequisites: First of all, the CAC40 is weak relative, for example, to the DAX or the main US markets, and is in the category of indices that look very fragile long term. Shorter term, there has been an upward bias since fall of 2011 and that has started to trace out something that could end up being a triangle. The upper resistance line is almost horizontal, and the support line is tilted in an upward direction. Short term, the CAC40 is caught up in a smaller formation that also has a triangular shape to it. In the smaller formation the support and resistance lines are converging.
Trading thoughts: As long as the price action is contained within the larger triangle, my assumption is that prices will oscillate in between support and resistance. This also means that we have fairly obvious levels to watch and to be aware of. Since prices in the larger pattern are at high levels relative to the support and resistance, my opinion is that we can assume the prices want to test the support line, i.e. prices are about to go lower. The trigger for the launch of the move to support is a breach of the support in the smaller triangle looking formation at about 3390. So we have quite a potential in a bear move from here!
If the price for some reason were to break the resistance line (upside move) of the smaller pattern, I wouldn't get too excited from a bull's point of view, because the immediate potential would be limited to the resistance of the larger formation.
This view is pretty much in line with my overall opinion of the markets but from a more traditional TA perspective.