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The CAC 40 Long Term Swing Count Suggests Bullish Cycles

Firstly the CAC 40 index has been trending higher with other world indices where in September 2000 it put in an all time high.  From there it followed the rest of the world indices lower into the March 2003 lows which was a larger degree pullback. From there the index rallied with other world indices again until June 2007. It then corrected that rally again as did most other world stock indices. It ended this larger degree correction in March 2009. From those 2009 lows, the index shows an incomplete swing sequence that favors further upside.

Secondly, in May 2018 price reached the area of 5623 – 6034 which is the .618 – .764 Fibonacci extension of the March 2009 to April 2015 cycle. This is a usual area for a 5th swing of a cycle to end which it did. The pullback into the December 2018 lows in the 6th swing corrected the cycle up from February 2016 lows. The analysis continues below the chart.

CAC 40 Index Monthly Chart with a swing count.

The extension areas are measured  as per the following. Use a Fibonacci extension tool on a charting platform. On this chart, point 1 will be at the beginning of the cycle at the March 2009 lows. From there on up to the April 2015 highs, marked with a 3, will be point 2. The point 3 will be down at the February 2016 lows. This point is marked with a 4. The extension areas shown are the same as long as price remains above those February 2016 lows. As of now, the index appears to have finished the 6th swing pullback at the December 2018 lows. It should stay above there while continuing the trend higher.

Briefly talking about Elliott Wave, we know impulses travel in 5, 9 & 13 swings. Corrective moves travel in 3, 7 & 11 swings. Either way you look at this cycle higher from March 2009, it appears to be incomplete.

Lastly in conclusion, the extension areas higher shown on the chart is where the index should be able to reach during this period of multiple world indices bullish trends higher. I do believe this index will ultimately travel higher in 9 to 13 swings. Conservatively the chart shows a usual target area for a 7 swing at the 6699-7364 area which likely will be surpassed before it ends the bullish cycle up from the March 2009 lows.

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Lewis Jones of the Team

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