CAC Forecast: Continues to See Massive Moves Higher

• The French CAC initially pulled back just a bit during the trading session on Tuesday but found buyers yet again.
• Ultimately, this is a market that I think continues to see a lot of bullish pressure, as we continue to see a lot of momentum.
• At this point, it looks like the €8100 level continues to be massive support, therefore I think you need to look at it through that prism.
• The market pulling back to that area almost certainly will offer some type of buying opportunity, as we have seen a lot of action in that area.

ECB and monetary policy

The European Central Bank will of course continue to take front and center stage when it comes to what happens with stocks on the continent, as traders are now starting to bet on the idea that perhaps the European Central Bank will have to loosen monetary policy. If that’s going to be the case, then it does make a certain amount of sense that stocks go higher due to the fact that most of what we see these days has to do with liquidity and not so much with the overall economy.

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The French economy course is starting to get a little sluggish just as the German economy is, and therefore I think you need to look at this through that same prism. Ultimately, you are looking at a potential buying opportunity every time it pulls back and I do think that the CAC goes looking to the €8250 level, an area that previously had been resistant. If we can break above there, then it’s likely that this market goes much higher, something that I fully anticipate seeing.

As for the floor in the market, I believe that it is at the €7900 level, an area that previously had been massive support and of course features a 50-Day EMA at the same time, so it’s a bit of a “double whammy” for technical analysts. At this point in time, we have to remember to buy the dips, because that seems to be with the way that most stock markets around the world are behaving, and the CAC of course is no different at this point in time.

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