- The CAC tried to rally on Friday, and although it did keep some of the gains, it ended up forming a bit of an inverted hammer.
- This of course makes quite a bit of sense considering that the European Union is a bit of a mess at the moment, as inflation continues to rage.
- Of course, we have to worry about the energy situation.
When you look at this chart, the €6000 level above is going to be a major resistance barrier, assuming that we get some type of relief rally. Any relief rally will almost certainly be sold into, as it is a significant barrier that we would have to pay close attention to. The 50-Day EMA is closer to the €6100 level and is dropping significantly. Ultimately, this is a situation that is going to continue to be a bit of a “fade the rally” type of situation, so therefore I think that any rally should be looked at as a potential opportunity.
Need to be Cautious
If we break down below the 5600 level, then it’s likely that the 5500 level will be targeted, which is a large, round, psychologically significant figure, and therefore I think there will be a bit of a fight in that region. If we break down below there, then the 5250 level could be a target. Ultimately, this is a situation that you need to pay close attention to exports, which of course are going to be decimated in the European Union. It’s interesting, the CAC is so highly levered to the luxury goods market, so you need to be cautious about that as well.
I think the one thing that you can probably count on is going to be a lot of choppy and noisy behavior, but the market will continue to be one that moves up and down with the overall attitude of global traders. After all, risk appetite is a bit of a fickle thing, especially now that people are concerned about so many things at one time. The Parisian index is the second largest in the European Union, so it will rise and fall with the overall attitude of the continent. Pay attention to the DAX, because it does have an influence on this as well. Ultimately, it would take a Herculean effort to turn this trend around.
Ready to trade our Forex forecast? Here’s a list of some of the best Forex trading platforms to check out.