Inverse Head and Shoulders Pattern Sets Up Bullish Signal on CAC 40
26 September 2024
In today's technical analysis, let’s revisit the indices, which we haven't covered in a while. Now is an ideal time as they are trending upwards with a generally optimistic market sentiment. American indices are outperforming their European counterparts, but today we’re focusing on the French CAC 40 index. The current setup reveals an inverse head and shoulders pattern, highlighted with blue rectangles. We are now forming the right shoulder, and the price is testing the neckline of this pattern, marked in red. If the price closes the day above this neckline, it would confirm a breakout and provide a solid buy signal, targeting the green horizontal resistance level.
Conversely, if the price fails to break the neckline and reverses lower, it could offer a short-term selling opportunity. However, this would be a short-term trade against the broader trend, as the long-term outlook remains positive. Therefore, while a bearish move might occur in the near term, the overall bias still favors a bullish continuation for the longer horizon.