It looks like we are going to try to break out to the upside, but we need a full daily close above that downtrend line to get serious about the uptrend again.
The Parisian index has rallied a bit during the trading session on Thursday after initially gapping higher. By doing so, the market looks as if it is trying to threaten the downtrend line which is the top of the channel that we have been in. Keep in mind that the market is trying to figure out whether or not it can continue to go higher, and the fact that the 50 day EMA sits right here makes quite a bit of sense.
All things been equal, this is a market that continues to see a little bit of noise more than anything else, but if we were to turn around a break above the downtrend line on a daily close, then it is likely that we could go looking towards the 6100 level. After that, the market will probably go looking towards the 6900 level, where we had pulled back from previously. That is an area that will cause quite a bit of resistance and therefore I think it looks likely to go looking towards the 7000 level at that point as it is the next large, round, psychologically significant figure.
To the downside, we have the gap from the session on Thursday that could offer a little bit of resistance, but even if we were to break down below there, the hammer from the previous session probably gets into the picture as well. If we break down below the hammer from the session on Wednesday, then it is likely that we will threaten 6400, and then perhaps down to the 200 day EMA. The 200 day EMA will be a massive support barrier, but if that gives way to selling pressure, it is likely that this market falls apart completely.
The Parisian index is highly sensitive to risk appetite in general, due to the fact that the index is so full of luxury brands. In other words, the market needs to see quite a bit of risk appetite out there to suggest that exports coming out of France will continue to fly around the world. As things stand right now, it looks like we are going to try to break out to the upside, but we need a full daily close above that downtrend line to get serious about the uptrend again. Until then, a bit of caution probably goes a long way.