What Assets Are Ideal To Trade The French Elections?

The Bull & Bear Statues at the Frankfurt Stock Exchange.

With the French election race heating up and with the FOMC, ECB monetary policy decisions done with, the path to the French elections are quite clear with no other major hurdles. There could be some short-term volatility or noise coming off the Dutch election results, and perhaps to an extent, some ripples can be felt from the UK’s Brexit talks.

Still, these are likely to be just minor ripples compared to the larger themes at play. With the French elections coming up, close to a month it is time to start focusing on what assets to trade heading into the French elections.

The CAC40

Starting with the most obvious choice, the French benchmark stock index will be the first place, to begin with. There are many versions of trading the CAC40, with the CFD version of the French stock index widely available for trading.

As with any stock index, investors are likely to sell off the CAC40 into the French elections, at least into the first round of elections, which is due late April.

The CAC40 is seen struggling near the 5000 mark, which acted as a resistance previously around October – November last year. The price action on the CAC40 shows that a potential downside swing is possible as price beings to consolidate within the larger rising wedge pattern.

The larger downside support is seen near 4500, which could be tested closer to the second round of the elections in May. For the moment watch for the price action on CAC40 to breach the minor rising trend line which could push prices lower towards the 4800 support level.

CAC 40 – Technical Outlook

From there on, CAC40 could remain range bound within 5000, and 4800 with a downside breakout likely that will extend towards the 4536 – 4500 major support that is pending retest.

Euro Stoxx 50

The Euro Stoxx 50, owned by Deutsche Borse group is a benchmark index comprising of the top 50 blue chip companies from the Eurozone. Nearly 19 constituents on the Stoxx 50 index are French listed companies. Thus, any uncertainty from the French elections will be felt on the wider European stock market as well.