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CAC 40: Testing again the 2014 high

Since the beginning of the year the index fell more than 1.5% however last week gained more than 1.5% and is in a recovery phase since the beginning of last week.

Last week the index rose with a narrow range and closed near the high of the week, in addition had the strength to close above the previous week high, which suggests a strong bullish momentum.

The stochastic is showing an overbought market although is still displaying a strong bullish momentum.

Expecting a downward move to a key level at 4,401 (scenario 1) on a rejection of the weekly resistance at 4,598 and a break below the key level at 4,401 could drag the index further down to a 2015 low at 4,225 (scenario 2).