France's CAC 40 plummeted another 4% on Monday, Aug. 8, extending the recent selloff to new lows.
EWI global analyst Chris Carolan uses Elliott wave analysis and supporting technical indicators to keep his European Short Term Update readers one step ahead of the trend.
On July 27, Chris' Elliott wave count for the CAC 40 told him that prices should move lower. The July 27 European Short Term Update wrote (emphasis added):
"The CAC 40 appears to be moving lower... we maintain our preference for the bearish scenario... These are treacherous times for all financial markets. While prices are likely to accelerate lower, they have a relatively short time window in which to do so."
As you can see in the Aug. 5 chart below, prices did accelerate lower -- quite emphatically. As of Aug. 8, the CAC 40 is down more than 16% since Chris' July 27 forecast.
"Sharply accelerating price declines like we've witnessed this week are very rare occurrences in financial markets. Forecasting is always about probabilities. But the interesting junctures are when the analysis says that a rare event is actually most likely to occur. Our July 27th analysis emphasized that prices had to accelerate lower to fulfill the forecast. As unlikely an event as that would be, it was precisely what the Elliott wave methodology pinpointed as the most likely resolution. The rest of the story, as they say, is historical data."
Chris forecast this price action in France's CAC 40 using the Elliott Wave Principle's objective set of rules and guidelines -- not with fundamentals or the news. The Wave Principle isn't a crystal ball, but you can see how useful it can be to help you identify and act on emerging opportunities.
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