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Hugo in HTO Trading,

CAC 40: On the road to 5,655

Since the beginning of the year the main French index gained almost 13.5% plus last week gained more than 2.0%, furthermore it remains in a bullish phase since early September.

Last week the main French index rallied with a wide range and closed near the high of the week, in addition managed to close above the previous week high, which suggests a strong bullish momentum.

The stochastic is showing an extreme overbought market and is beginning to display lack of momentum.

CAC 40 broke the previous year high at 5,394.5 and made a fresh new one and now is looming for a Fibonacci extension at 5,655 that should be the next point of resistance. Question now is will it continue rising or begins a pullback before resuming its upward trend?

Expecting an upward move to a Fibonacci extension at 5,655.0 on a break above the previous week high at 5,510.5 (scenario 1) however a pullback toward the previous 2017 high at 5,394.5 and later rebound may trigger another bull run up to a Fibonacci extension at 5,655.0 (scenario 2).