Top pick for the day - France’s CAC 40

Bearish flag breakdown?

France’s CAC 40 Index (CAC) could see more weakness once this rebound ends.

Our LT bearish view on CAC is still intact as the index tumbled sharply from where we issued a warning (see 6th November issue).

The index has fallen below the ST key levels mentioned in the previous report but the LT critical support is still intact (at 4,278 and 4,230).

Nonetheless, we expect the current rebound to be a minor one and once concluded, we think that CAC would likely fall and test the LT critical supports mentioned above.

A break below those supports would likely see the CAC tumbled towards its Fibonacci targets of 4,024 and eventually 3,414 next.

Critical resistance is now at the November high of 5,011.

A move above that level would require us to read just our ST bearish wave count but the LT bearish count remains intact.

2016 is likely going to be a wild and volatile year for CAC and the European markets. (Read Report)

Source : CIMB Research