Summary:
- The French stock market index pulls back after hitting ATH
- FRA40 performed better than DE30 as of late
- Key support for the French index at 5555 points
The French stock market has been doing much better than the German stock market recently. Nevertheless, FRA40 struggles to uphold recent gains. Looking at the daily time frame - D1, one can see that the price clearly reversed after ATH was reached. In the first week of this month, exactly on Wednesday 3 July, we could observe the FRA40 index on the highest level of the year so far. The price stayed there for just a moment before turning lower. However, the downward momentum eased last week and the market began to consolidate. Such a situation may of course be influenced by the enthusiasm in the United States, where stock market indices are at the highest levels in history. However, European indices as an aggregate performed much worse than their US peers, what can be easily seen by looking at the DAX chart. Moving back to the FRA40, the closest support level to watch can be found at 5555 pts handle and unless a break lower occurs, one should not rule out the possibility of price testing ATH in the nearby future.
Source: xStation5
Looking at the lower H4 interval, there is little to worry about. The aforementioned 5555 points handle was being guarded by the bulls throughout the past week. In fact, the index has been trading in an upward trend since the beginning of the year and an even bigger correction may not be enough to halt it. A break below the green trend line could be a strong selling signal, but the index remains far away from this hurdle. However, the latest consolidation may be a little worrying and a failure to break to new highs may trigger to a larger correction. In such a scenario one should focus on the 5555 points handle.
Source: xStation5
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Create account Try a demo Download mobile app Download mobile app We have mentioned at the beginning of the analysis that the German stock exchange has been doing slightly worse recently. This can be seen when we overlay charts of both instruments on each other. As one can see, the German DAX moved clearly lower last week, while the French FRA40 kept trading within a consolidation range. In case the negative sentiment on the German stock market prevails, other European indices may follow lower. In such a scenario the 5555 pts handle could be at risk.
Source: xStation5
