Revisiting the French Index: Unraveling the Bearish Signals

Revisiting the French Index: Unraveling the Bearish Signals
For today's technical analysis, we revisit the French Index, CAC, which we previously analyzed in mid-June. During that period, we were inclined towards a bearish perspective, given that the price was lingering below a crucial horizontal resistance. Presently, we see that our bearish stance was spot on as the price, having bounced off the resistance, has dropped significantly.
Technically, the price has just completed forming the right shoulder of a sizeable head and shoulders pattern, which is highlighted in yellow on the chart. Concurrently, the price has broken past the neckline of this pattern, indicated by the pink line. This breakout should ideally serve as a suitable signal to sell.

However, if you remain unconvinced, there's an option to wait for the price to break past the 23.6 Fibonacci level, currently serving as the most significant horizontal support for CAC. This region also aligns with the lows recorded in May and the initial trading day of June. Therefore, a break below these levels could provide an excellent signal to go short, thereby confirming the neckline breakout and triggering the head and shoulders pattern.

This bearish outlook will only be invalidated if the price manages to breach the 7,360 resistance level, which we've previously discussed and is represented by the orange line on the chart. Should the price ascend above this area, it could provide a strong signal to go long. However, given the current market conditions, the chances of this happening appear slim, making the bearish scenario more probable.
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