With the CAC40 closing above the pink horizontal line, we can consider the double top formation is dead.
Now, looking at the 2 blue lines, we see an obvious broadening formation called: "right-angled and ascending". For more details on this pattern, have a look at the encyclopedia of chart patterns (Thomas N. Bulkowski): http://www.thepatternsite.com/rabfa.html
According to historical data, the next contact with the blue ascending line should be an interesting tradable point:
- If we are able to move above this line, the price target should be around 4200 (3970 - 3600 = 370; 370 * 0.68 + 3970 = 4221.6)
- If we start to decline after the next hit, then the first target should be 3600, and if we move below the key 3588, then the next target should be around 3480 (3970 - 3600 = 370 ; 3600 - 370 * 0.32 = 3481.6)
(All the details on computing the price targets are available on the link mentioned above)
Our strategy:
When the market will hit the ascending blue line (next time), we will wait for the first 1.5% delta, then we will follow the direction of the market with the ascending blue line as our stop loss.
