- The CAC has been somewhat quiet during the trading session on Tuesday, as we continue to hover around the €6800 level.
- This is a market that has seen a lot of upward momentum as of late, so it’s not you surprised to see that we have simply paused in this area.
- Whether or not we pull back remains to be seen, but it most certainly would make quite a bit of sense.
However, when you look at the longer-term pattern in the CAC 40, you can see that we have formed a massive bottoming pattern. Whether or not it holds remains to be seen, but it’s clear now that since we bounce from the 200-Day EMA, currently sitting right around the €6400 level, the market has been extraordinarily bullish. The market continues to see a lot of noisy behavior, as the initial move higher was more of a chop-back-and-forth type of scenario before we took off to the upside. This has clearly brought the €7000 level into focus, and I think that is your next breakthrough when it comes to French stocks.
Noise Ahead
At this point, the Parisian index continues to look as if there is plenty of noise all the way down to that area, so I think you looking for some type of pullback to offer value. It is probably worth noting that the candlestick on was a shooting star, so it does suggest that perhaps we are looking very exhausted now, and therefore at the very least I think we probably need to figure out what to do with this market. I think there are plenty of buyers all the way down to at least the 50-Day EMA, which is just above the psychologically important €6500 level. Keep in mind that most European indices do tend to move in the same direction overall, and Germany is doing much the same right now.
On the other hand, if we do break above the top of the shooting star from the Monday session, that opens the possibility of challenging that crucial €7000 level. In that scenario, you’ve got a situation where we have a juicy and obvious target, and I do think we get there. The question at this point is whether we get a little bit of a pullback, or if we simply rip to the upside to get there.
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