- The Parisian CAC initially tried to rally a bit during the early hours on Wednesday, but as we crossed the 200-Day EMA, we started to see selling pressure again.
- At the €7729 level, it seems as if there is a significant barrier that it’s difficult to break, which of course is backed up by the 200-Day EMA, an indicator that a lot of the longer-term players will pay close attention to.
Having said that, I do think that it’s probably worth noting that we have bounced quite a bit from the lows of the day, and it does suggest that there are these people out there willing to step in and pick up cheap French equities. Ultimately, a lot of what we have seen recently is an overreaction to the idea that there is going to be a snap elections in France, and what that could mean going forward. Regardless, cooler heads will prevail, and I do believe that value hunters out there are looking at French equities with great interest.
Technical Analysis
The technical analysis of course is slightly negative as far as moving averages are concerned, but truthfully, I find moving averages may be a tertiary indicator at best. After all, if it were that easy to trade, professional traders would just simply use moving averages, and everybody would be rich! Obviously, that’s not the case so I think a lot of people are looking at the idea of whether or not the French economy is going to struggle, or if it is going to pick up.
Furthermore, you also need to pay attention to the euro, because if it continues to weaken, that could help the idea of French equities picking up, due to the fact that so many luxury brands are represented by the CAC 40 that the idea of foreigners buying French luxury goods could be a big driver as well.
On a break above the €7700 level, I think this is a market that will go directly to the €7900 level, currently the home of the 50-Day EMA, and of course an area that we had previously seen support at, so there should be a certain amount of “market memory” offering resistance at.
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