CAC Forecast: Continues to Trade Within a Larger Range

Christopher Lewis

The European Union is of course an area that has been difficult to deal with, as there are so many different moving pieces at the same time.

The CAC has bounced a bit during the trading session on Wednesday as the €6000 level is being watched so closely. The €6000 level of course has a certain amount of psychology attached to it, but it’s also an area where we have seen previous support multiple times, so at this point, it does make a certain amount of sense that we have bounced a bit.

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Whether or not we can maintain above €6000 is a completely different question, but if we were to break down below the €5900 level, then it’s likely that the CAC will continue to drop. In the short term though, it looks like we are going to try to bounce, perhaps reaching toward the 50-Day EMA. The 50-Day EMA is an area that a lot of people will pay attention to, and it just so happens that it is right above the €6200 level.

Market Waits for a Bounce

  • Break it above that opens the possibility of a move to the 200-Day EMA near the €6400 level.
  • The top of the overall range is near the €6600 level, so therefore I think it is only a matter of time before we see sellers in that area.
  • I don’t necessarily think that we can break out to the upside, but now I think the only thing that we are going to see is going to be a lot of noisy behavior, and therefore you need to pay close attention to your position sizing because there are a lot of problems in the European Union.
  • The European Union is of course an area that has been difficult to deal with, as there are so many different moving pieces at the same time.

The ECB may have to loosen policy rather quickly since there is a lot of noise in the EU, not the least of which of course would be the war continuing in Ukraine. However, there’s also inflation so it could continue to make this a bit of a mixed bag to say the least. In the short term, does look like we are going to bounce, but I would not hang onto a trade for far too long. We have a clearly defined range, which is probably best traded with a range-bound swing trading system.

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Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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