#DAX & #CAC40 Forecast (5 June 2024)

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CAC Forecast: Continues to Focus on €7900

  • The Parisian CAC fell significantly during the trading session on Tuesday, but he continues to see support in the same general vicinity, namely the €7900 level.
  • Because of this, I do think that we have a situation where traders will pay close attention to whether or not this level holds, as it is a large, round, psychologically significant figure, and of course it’s also an area that has already been tested multiple times.
  • That's the reason why I will be watching very closely.

Are We Still Range Bound?

I think at this point in time, the market is still trying to question whether or not we are range bound, and I do think that the next couple of sessions could be a pivotal turn of events for the market, and therefore we need to pay close attention to what happens next. Ultimately, this is a market that will have to make a decision, and the fact that we have the European Central Bank with an interest rate decision coming up in the next couple of days means that we are going to see a lot of noise. At this point in time, we could see some type of huge decision made, and once it’s made, we can put money to work.

If we were to break down below the €7900 level, then the market could go falling toward the 200-Day EMA which is closer to the €7700 level. On the other hand, if we turn around a break above the 50-Day EMA, it could open up the possibility of a move to the €8250 level, an area that has previously been resistance, and therefore I think you need to look at that as the potential top of the overall range.

All things being equal, I think you continue to see a lot of noisy behavior of the next couple of sessions, and therefore I think you need to also look at it through the prism of whether or not we get any type of momentum. Ultimately, this is a market that will make a bigger decision soon, and I will be following which of her direction it breaks.

DAX Forecast: Falls to Find Support Again

  • The DAX had initially fallen during the trading session on Tuesday, but it does look like the 50-day EMA is trying to hold things together.
  • The 50-day EMA sits just above the 18,250 euro level, an area that has been important more than once.
  • So, I think it all ties together quite nicely for a potential move to the upside.

Caution Continues to Be the Way

At this point, I think you've got a scenario where traders will continue to be very cautious, but they will recognize the fact that the market is likely to be very erratic, but positive over the longer term. The ECB is likely to cut rates either this week or maybe at the next meeting. And I think a lot of traders out there are trying to bet on that. If they do not cut rates, then it's possible that the volatility could be extreme this week, but all things being equal, the uptrend is still very much intact.

Even if we were to break down below the 18,250 euro level, the 18,000 level would be a major support level as well. In general, this is a market that I think continues to see a lot of buy on the dip attitude. I do think that the prize is to be found closer to the 19,000 euro level.

Breaking above there, we could see a move all the way to the 20,000 euro level. Keep in mind that the DAX represents Germany, which of course is the biggest economy in the European Union. So, this will be the first place that people put money to work when trying to invest in the continent. I like the overall trend. I just recognize that it might be noisy for the next couple of sessions.

Because of this, I think you are probably better off waiting to see whether or not we can get momentum to the upside that you can follow. Shorting this market is all but impossible, at least not until something drastically changes. It looks as if the DAX will continue to be positive, but with the volatility that we can expect, you may be better off just waiting.


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