CAC Forecast November 11, 2015, Technical Analysis

The CAC fell a bit during the course of the session on Tuesday, testing the 4850 level for support. We believe that this market will eventually bounce from here, but we do not have the impulsive move higher to start buying. We recognize that the €5000 level above is significant resistance, based upon the fact that it is a large, round, psychologically significant number. With that in mind, we anticipate several attempts to break out above there, and every pullback at this point in time that show signs of support is value as far as we can tell. Once we do get above the €5000 level, the market will more than likely reach towards the €5100 level, followed by the €5200 level.

Keep in mind that the French markets are considered to be one of the “safer” markets to be involved in when it comes to the European Union as money floods back into the continent. European indices in general look like they are ready to bounce, and as a result it makes sense that the so-called “safe” indices should go higher first. We believe that this market is going to be one of the better performers in the European Union, along with the German DAX.

We have a massive gap below at the €4800 level that should continue to offer a bit of a “floor” in this market. The fact that the candle for the Tuesday session is somewhat of a hammer only furthers are result that this area will hold. Ultimately, we are simply looking for reasons to start going long of the CAC, and will do so as soon as possible. We also recognize that this could be a longer-term “buy-and-hold” type of situation once we get above the aforementioned €5000 handle. After all, that is a psychologically significant number and crossing it would of course mean a lot to various traders around the world. At this moment in time, we have no interest whatsoever in selling this market because it is showing such a nice uptrend from the lows during late September.