Index slams into the 200-day EMA
I’ll be careful to put too much money in to work right away.
The Parisian CAC index recovered on Monday to reach the level of €6,600. This is an area that exhibited the 200-day EMA and previous structural resistance. We pulled back from there as stocks generally lost some of their initial gains. It wasn’t just in Paris, we also saw the same thing in Amsterdam and Germany. For this reason, it is likely that we will see a bit of a pullback from the previous consolidation.
Below the €6400 level is an area where I would expect to see some support, but between here and there we also have the 50 day EMA. Because of this, the market is more likely to be very loud and choppy, so if you’re a short-term trader, the CAC could be a great place for the next few days. Eventually, we’ll have to make a breakthrough one way or the other, leading to two different possibilities.
If we break below the €6,400 level, it opens up a possible move towards the €6,300 level, followed by the €6,100 level. On the other hand, if we break higher, it is possible that we are looking to reach the €6800 level, where we have seen a lot of pullback over the past few months. This will largely depend on risk appetite, and it should be noted that the CAC is full of luxuries, which means it is particularly sensitive to risk appetite.
Typically, when we’re stuck between the 200-day EMA and the 50-day EMA, you see a lot of choppy volatility before you make a bigger move in either direction. I think that’s what we’re about to see here, so I’ll be careful to put too much money to work right away, but I will pay attention to the levels I mentioned earlier as this may give me some insight into where the market might go. Obviously, there are a lot of macroeconomic issues right now, and so the occasional announcement or statement could also cause problems. For this reason, you need to be very careful about your position size, as a sudden move could knock you out.