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MENAFN- Daily Forex) Potential signal:
- At this point, the CAC looks more vulnerable than the DAX. I think if we break below the lows of the trading session on Monday at the €7438 level, then I am shorting this market.
- However, I would only do that with the caveat that the DAX has started to drop as well.
- I would put a stop loss at the €7550 level, and would be aiming for the €7150 level below.
The CAC Quarante has shown itself to be bullish during the early hours on Monday, but then looks as if it is going to struggle with a 50 day EMA. The 7,500 euro level is an area that I think a lot of people will pay attention to because it is a large round psychologically significant figure, but it is also an area that's been important multiple times in the past. With that being said, I think you've got a situation where the market is probably going to continue to be very noisy, but I think a drop from here makes quite a bit of sense. If we do break down below the bottom of the candlestick from the Monday session, then I think you'll probably see Paris drop again.
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Keep in mind that a lot of stock markets around the world are moving in the same direction at the same time. So, if we start to see selling pressure again, then I think Paris will be particularly hard hit. We are approaching an area of significant noise between 7,500 euros and 7,700 euros. So I am definitely watching for something like a shooting star or a turnaround and a breakdown that I can start shorting.
I do not want to buy this market; I believe that Germany will lead the way. So if I had to buy a European index right now, it would probably be the DAX and not the CAC. That being said, I think this is a market that is going to continue to struggle in general, and it almost certainly will lag Germany and some other places like the indices in New York.
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