The French CAC 40 Index is currently approaching a key horizontal support level at 7,340 points, marked with blue lines on the chart. This level has proven its significance multiple times throughout the year. In September and November, it acted as a robust support level, with price rebounding strongly on both occasions. After being breached, it briefly served as a resistance before the breakout at the beginning of December. Now, it has reclaimed its role as a critical support level.
This situation presents a potential buying opportunity, particularly if the price holds above the 7,340-point area and forms a bullish reversal pattern, such as a hammer, bullish engulfing, or a strong bullish candlestick. The recent breakout of the black downtrend line, which marked the beginning of December, adds another layer of confidence to the overall bullish outlook. Breaking this downtrend line suggests that sellers have lost control of the trend, and buyers are gradually gaining momentum.
Moreover, the global sentiment on indices remains positive, further supporting the likelihood of a bounce. A successful defense of this support would align well with the broader bullish environment, providing a technical basis for buyers to re-enter the market.
However, as always, it's crucial to wait for confirmation. A daily close above 7,340 points, combined with a clear bullish candlestick pattern, would strengthen the case for a continued uptrend. Conversely, if the price breaks below this support, it could signal a deeper correction, invalidating the bullish scenario and opening the door for sellers to take control. Until then, this level remains a focal point for traders.