France’s stock market has been riding a wave of bullish momentum as its luxury CAC40 blue-chip index futures (EURONEXT: FCE) broke through record highs on a third consecutive day of trading in the green. With inflation easing in major economies, how high can the futures go before a potential recession clips its wings? 

On Friday, France reported year-on-year inflation of 5.7%, down from the prior period’s 6.3%. On a monthly basis, inflation fell to 0.7% from the preceding month’s 1% and below the 0.8% expectation. Similar trends have been seen in major economies worldwide, with Germany reporting a slowdown in their yearly inflation on Thursday. The US has also reported softer inflation and PPI data while jobless claims rose, prompting equity investors to set their sights on the end of the Federal Reserve’s hiking cycle. 

Technical 

On the 4H chart, technical indicators signal a continuation of bullish momentum as the futures trade above the 50-day moving average on a clear uptrend, above the daily pivot point of 7,479. However, resistance at 7,520 (R1) is nearing, which could pose a test to the bullish run. 

If the bulls break through this resistance, they could continue testing new record highs at 7,555 and 7,596. However, if R1 stunts the momentum, the bears may look to retest the uptrend around the daily pivot at 7,479. A breakdown could lead the bears to support at 7,444 (S1). However, strong support exists at 7403.5, which could floor the potential downturn on current fundamentals. 

Summary 

While the bulls enjoy a strong upward rally, immediate resistance at 7,520 poses a risk to the momentum. If the bears resist, a move toward the uptrend support at the daily pivot point of 7,479 is on the cards. However, on current momentum, the bulls could push on toward 7,555 if they manage to break through immediate resistance. 

Sources: Koyfin, Tradingview