- It's obvious that we have seen a lot of noise and negativity.
- However, when you look at this, it is a market that I think will continue to pay close attention to the 7,500 euros level as it has held firm over the last couple of months.
If we were to break down below the 7,500 euros level, then we could see a pretty significant sell off, but I don't think that is going to be something that happens easily. We are at an inflection point because we are underneath the 200-day EMA, and that is, I think, what a lot of traders are looking at from a technical analysis standpoint that would be very bullish for the CAC. On the other hand, if we were to break down below the 7,400 level, then I think we really would start to drop, perhaps down to the 7,000 euro level.
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Overall Outlook
In general, this is a market that I think continues to be noisy and unless something changes, you could be a trader that prefers to go back and forth over a short-term range, taking advantage of a well-defined support and resistance barrier. With this, I believe that the CAC is in the midst of trying to sort itself out, but I think given enough time, we will have an explosive move in one direction or the other. Keep in mind that we are still technically in an uptrend from a longer term standpoint, but we are really on the precipice of something big.
Ultimately, I think the one thing that you can probably count on is a lot of choppiness in the short-term, but in the longer term we could have a €200 or perhaps even €300 move. I also recognize that Paris is a little bit different than a lot of the other indices in the European Union, due to the fact that it is heavily influenced by the export of luxury goods coming out of France. With that being said, the market is likely to continue to be somewhat noisy at this juncture.
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