CAC trades in the middle of a triangle pattern

Earlier in the day, the German IFO Business Climate Index fell further to 94.7 in December versus last month's 96.6 and the consensus estimates of 95.3. Meanwhile, the Current Economic Assessment arrived at 96.9 points in the reported month compared to the previous 99.0 and 97.5 anticipated. 

The IFO Expectations Index – indicating firms' projections for the next six months, fell to 92.6 in December from the previous month's 94.2 reading and worse than the market expectations of 93.5. The euro slid after these numbers, worsening the sentiment in the markets and dragging down stocks.

The French CAC is now testing August highs of 6,900 EUR, which seems to be the significant support in the short-term perspective. The 50-day moving average is also near this level. 

Should the price drop below that support, we could see a decline to the lower line of the triangle pattern, currently near 6,800 EUR.

Alternatively, if sentiment improves during the US session and the drop is bought, the CAC index could advance toward the upper trend line of the triangle, seen at around 7,040 EUR. However, it would first need to jump above the psychological level of 7,000 EUR.

The long-term uptrend in stocks could be over pretty soon amid the relative hawkishness of the major central banks.