The CAC 40 index futures soared to a fresh four-month pinnacle on Wednesday, fueled by robust performances from Renault (6.31%), WorldLine (5.49%), and Alstom (3.75%). Although facing a minor dip due to TotalEnergies (-1.2%) and Teleperformance (-1.5%), the futures responded optimistically to the softer-than-anticipated US ADP Employment data.
The ADP Employment Change reported 103K, falling short of the 130K consensus, signalling a tempered labour market. This development strengthened the belief that the Federal Reserve’s rate-hiking era might be over, with expectations of impending rate cuts in the months ahead. While the prevailing sentiment remains positive, the landscape could shift with the release of NFP data on Friday, allowing for potential consolidation in the upcoming session.
Technical
On the 4H chart, a strong ascending channel is present. Resistance at 7,464.0 stood in the way of continuous upside in the prior session but could undergo a retest if support at 7,379.5 keeps the channel formation in play as we advance.
A breakdown of the support at 7,379.5 could lead to a test of the 25-SMA support at 7,356.0. The 50-SMA (blue line) is not far below, offering additional support at 7,312.5, making psychological support to the potential channel breakdown, where a retracement could be initiated.
Alternatively, if support at 7,379.5 holds in the upcoming sessions, the futures could move back towards 7,464.0 if the NFP report confirms the dovish sentiment. Higher resistance is established at 7,507.5, presenting a hurdle to the sustainability of the breakout, with higher resistance at 7,543.0 potentially triggering some profit-taking behaviour for a retracement of the rally.
Summary
With the CAC 40 futures trading close to 4-month highs, we could see some consolidation ahead of Friday’s significant US NFP release. Support at 7,379.5 could be a critical level in the upcoming sessions to keep the ascending channel formation in play.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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