CAC slips, tests previous highs


European stocks slid on Friday as traders took some profits from the previous rally, which sent the French CAC index down 1% to trade at around 5,600 EUR ahead of the US session.

It looks like more lockdowns are needed in the EU to prop equities further as investors have been really loving the ideas of lockdowns. More lockdowns mean more free money by central banks and governments, and most of that money ends in the stock markets anyway.

The short-term support is at previous cycle highs near 5,600 - 5,620 EUR, and if the index drops below that support, we could see a larger correction, targeting 5,500 EUR or possibly the December lows near 5,300 EUR.

Alternatively, if US investors buy the dip, the index might rally toward 5,690 EUR, with the main resistance spotted at the current cycle highs near 5,730 EUR.

The long and medium-term trends remain bullish amid fresh lockdowns and money printing by central banks. 
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