Nathan BatchelorThe CAC 40 is struggling to advance past key technical resistance, further increasing the chances of a bearish technical correction.
CAC 40 analysis shows that the index remains vulnerable to further heavy losses while the price trades below the 4,660 level.
CAC 40 medium-term price trend
The CAC 40 recently suffered a heavy technical rejection from the 4,720 level, as traders booked profits following the multi-week recovery from the March 2020 low.
CAC 40 technical analysis shows that the index could still fall to a new multi-year low if the price remains capped below the 4,660 level.
The daily time frame highlights that a large inverted head-and-shoulders was invalidated during the March 2020 global stock market decline.
It is noteworthy that the invalidated pattern has yet to meet its full downside projection, which is around the 3,400 level.
Failure to overcome the 4,660 level, and repeated technical failure around current levels, could see the index falling towards the mentioned bearish target.
CAC 40 short-term price trend
CAC 40 technical analysis shows that the index has a bearish short-term bias while trading below the 4,440 level.
The four-hour time frame is showing that a bearish head-and-shoulders pattern has formed, following the recent technical rejection from the 4,720 level.
According to the size of the bearish pattern, the index could decline by around 600 points if the 4,140 support level is broken.
It is also noteworthy that the mentioned head-and-shoulders pattern appears to be complex in nature.
With this in mind, multiple right-hand shoulders may need to form before a bearish breakout occurs.
CAC 40 technical summary
CAC 40 technical analysis shows that the index remains vulnerable to more declines while the price trades below the 4,660 level. A major downside move could occur if the 4,140 support level is broken.
