Hugo
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Hugo in HTO Trading,

CAC 40: Making a potential bullish flag

Since the beginning of the year the main French index gained more than 7.0% but last week gained more than 1.5%, furthermore it is in a warning phase since late June.

Last week the main French index initially fell but found enough buying pressure to reverse plus trim all its losses and closed near the high of the week, however closed within the previous week range, which suggests being slightly on the bullish side of neutral.

The wide range, wide-spread weekly candle with normal volume does not show any evidence of an anomaly or even a reversal.

The stochastic crossed below the 50 mid line and is displaying a strong bearish momentum.

Expecting a downward move to a Fibonacci extension at 5,140.1 on a bounce from the higher end of the weekly support at 5,235.0 (scenario 1) however a break above the higher end of the weekly support at 5,235.0  may trigger a bull run up to a Fibonacci extension at 5,392.4 (scenario 2).