The Parisian index has been rising for several months, and the last couple of weeks have done something particularly interesting as far as I can see, pulling back only to find more buyers. The fact that the last 3 candles on the weekly chart have formed hammers suggests to me that we will continue to see buyers.
Another thing that interests me is the fact that the €5000 level has offered support as well. I believe this is a sign that larger money is starting to come into the market, as it typically does at large round numbers. A break above the top of the range for the last week should send this market looking towards the highs again, and because of this I believe that April should be a relatively positive month for the CAC.
Buying dips
On this market pulled back, it’s very likely that buyers will come back into the market looking at the index as offering value. The longer-term move should be towards the highs, which are currently at 5290 or so, and with the recent consolidation that we have seen over the last several weeks, I believe that the momentum will be strong enough sometime during the month to send this market looking for those highs. I also believe that we break above there given enough time, but probably not during this month.
Even if we do breakdown from here, I see a significant amount of support at the 4950 handle, and the 4800 level below there. The CAC tends to follow the DAX, so pay attention to the German index as well, as it has a bit of a knock-on effect over here. I believe that the market is already setting up for this move, because the phenomenon of triple hammers is somewhat rare. This shows just how much interest there is in the market, and just how many people are willing to take advantage.
