- The CAC 40 has rallied a bit during the trading session on Monday, gaining a little over 1% to recapture the 200 day EMA.
- That being said, this is a market that I think you have to look at through the prism of the longer term and question whether or not this is going to be a recovery or if it's just a temporary bounce.
It is worth noting that the recent pullback has bounced directly from the 50% Fibonacci retracement level and that won't go unnoticed. If we can break above 7,750 Euro, then the market could very well go to the 50-day EMA near the 7,900 Euro level.
Top Forex Brokers
If we break down from here and break below the lows of the last week or so, then we could drop down to the 7,340 level, an area where we have the 61.8% Fibonacci retracement level. Keep in mind that equities around the world are in the process of trying to recover from whatever happened late last week as Wall Street finally admitted that there might be inflation. However, they generally have the memory of a cucumber, meaning that they are probably going to jump in and inflate stocks yet again.
ECB is Supportive
The European Central Bank of course has recently cut rates, so that has an effect on stocks as well. So I do think that overall the sentiment remains positive, but it might be a bit noisy on the way back up. I like buying little dips with little positions. I don't want to put a ton of money into the market in any one shot, but I do recognize that it's almost impossible to short the CAC at the moment.
This is especially true as France continues to recover from the surprise that the market had to deal with involving a snap election recently. This is a sign that cooler heads have prevailed, and the stock market should stabilize overall.
Ready to trade our daily forex forecast? Here are the best CFD stocks brokers to choose from.