Updated: Nov 15
Hello again. It´s been a while since I last posted a new article so I thought I´d put that right. However, instead of writing up another piece on general trading or another look at the Dax I figured I´d go a little off piste and take a look at the Cac 40 - the French index.
While this index is much less popular than the Dax, the FTSE or the Stoxx 50, someone mentioned to me recently that it might be worth taking a peek at as it had a nice fit with the way I like to trade.
As you may or may not know, dependent on whether you´ve been following me on Twitter or taken a look at my site, my main focus is on the Dax after I made a switch a few years ago from almost exclusively trading the major forex pairs. I still ´keep my hand in´ so to speak with forex but much less frequently. You will also know, if you have been trading the Dax recently, that it has been a tough gig for the past few months. Tight ranging price action with falling ATR, slow tempo and volatility intraday while it contends with new ATH´s and the ever rising US markets, has made it tricky to say the least.
Of course this will change (probably ?) in time but it has given me recourse to have a look elsewhere. After having another look at the FTSE and deciding, nah... not for me, again, (I have always given the FTSE the benefit of the doubt but for some reason it just doesn't resonate with me), someone tipped me off to look at the Cac. And, I´m pretty impressed at first sight.
While the Cac lacks the ´headline glamour´ and is somewhat considered the junior partner in Euro area trading (I guess if you are French you may have a different impression!), a quick look at the price action, for someone who trades pure intraday p. a., suggests one might be missing a trick here.
What I mean in a nutshell is that a cursory look back at pa over the past few months and particularly of late tells me that the index is quite orderly with regard to respecting decent levels. For me this is important as I am first and foremost a level to level day trader / scalper. I don´t use any indicators, prefer to look at clean (naked) charts, and base just about everything I do vis a vis my trades on context, marked up HTF and LTF levels and my read of the tape as it evolves during the regular trading hours. So as a first cut, being able to eyeball levels pretty easily and seeing that there is generally a decent reaction on a first pass basis, gets me interested. On that basis the Cac has my attention.
You will have to go back and look at your own charts to get a detailed picture but the recent H1 chart below shows (to me at least) there is opportunity to be had intraday price action trading and scalping. The blue levels are HTF (higher time frame) levels marked up from the daily down to the hourly and you can see straightaway the p a responding to them. The red ovals are where decent odds trades (good r:r) could have been made.
Granted there is not a mass of trades to be had (maybe 1 or perhaps 2 really clear set ups per day) and they may only have been for 20 to 50 points but from my way of thinking they were all pretty clean and triggered at decent levels easily marked up in advance.
It is clearer when we look at the last weeks opportunities on the M15 chart (see below). Just like the Dax, we have been trading a tight consolidation range where there have been good odds trades at the edges but you can also see the mid range opportunities based on structure, open levels, previous day Highs and Lows and closes, doji´s, Fibs etc. Pretty standard pa trading.
The M5 charts below show the detail a little more clearly.
So, if you are a day trader considering checking out another instrument, I would suggest some analysis of the Cac 40 could pay off handsomely
Nothing like a bit of off piste in the Cac 40 French Alps!