Technical analysis: Will the FR40 rebound continue?
|Recommendation for CAC 40: Strong Buy
Buy Stop: Above 4707.51
Stop Loss: Below 4189.58
| Indicator | Value | Signal |
| RSI | Neutral | |
| MACD | Buy | |
| Donchian Channel | Buy | |
| MA(50) | Buy | |
| Fractals | Buy | |
| Parabolic SAR | Buy |
Chart Analysis
On the daily timeframe FR40: D1 has rebounded above the 50-day moving average MA(50) which has stopped declining and is rising. We believe the bullish momentum will continue after the price breaches above the upper Donchian boundary at 4707.51. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below 4189.58. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop-loss level (4707.51) without reaching the order (4189.58) we recommend cancelling the order: the market sustains internal changes which were not taken into account.
Fundamental Analysis
France’s private business sector contraction slowed. Will the FR40 rebound continue?
French economic data in the last couple of weeks painted a picture of an economy in dire straits but showing signs of easing of the steep downturn. According to Markit, France’s Manufacturing PMI increased to 40.3 in May of 2020 from a record low of 31.5 in April, better than market expectations of 36.1. And Services PMI increased to 29.4 in May of 2020 from a record low of 10.2 in April, when a reading of 27.8 was expected. Readings above 50 indicate activities expansion, below indicate contraction. So while contraction in private business sector continued it slowed. Better data are bullish for FR40. At the same time deterioration of France’s economic performance is a downside risk: France's economy is on course to contract 20% over quarter in the second quarter, the INSEE official statistics agency estimates.
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