Current trend

One of the leading indexes of the European economy CAC 40 is corrected at around 7254.0.

The period of publication of corporate reports is almost over, and investors are once again focusing on macroeconomic statistics and the situation on the domestic bond market. Today, the August data on business activity in the leading sectors of the French economy were published: the Manufacturing PMI rose from 45.1 points to 46.4 points, and the Services PMI fell from 47.1 points to 46.7 points. At the same time, the Composite PMI remained at the same level of 46.6 points, while the forecast was 47.5 points.

The upward trend continues on the bond market, which was confirmed by auctions for the placement of short-term bills. On Monday, the yield rates of 3-, 6- and 12-month securities amounted to 3.684%, 3.658% and 3.639%, respectively, which significantly exceeds the figures recorded a week earlier (3.657%, 3.637% and 3.627%). The situation is similar in 10-year bonds, where the yield in recent days has increased to 3.165% from 3.000% in early August.

The growth leaders in the index are ArcelorMittal SA ( 2.80%), Eurofins Scientific SE ( 2.57%), STMicroelectronics NV ( 2.47%).

Among the leaders of the decline are Danone SA (-0.81%), Pernod Ricard SE (-0.68%), L’Oreal SA (-0.43%), Engie SA (-0.33%).

Support and resistance

On the daily chart, the quotes are held within the global side channel with the boundaries of 7500.0–6940.0, preparing to continue moving downward.

Technical indicators reversed and are holding a new buy signal: the fast EMAs of the Alligator indicator are moving away from the signal line, and the AO histogram, being in the sell zone, is forming corrective bars.

Support levels: 7150.0, 6940.0.

Resistance levels: 7330.0, 7500.0.

Trading tips

If the asset reverses and contiues declining and the price consolidates below the local support level of 7150.0, short positions can be opened with the target at 6940.0. Stop-loss — 7250.0. Implementation time: 7 days and more.

If the asset continues growing, and the price consolidates above the local resistance at 7330.0, long positions with a target of 7500.0 and stop-loss of 7250.0 will be relevant.