Choppy Behavior in Downtrending Channel

In general, I have no interest in trying to get long.

The Parisian CAC Index gapped higher Monday but then pulled back to find buyers underneath. By doing so, it suggests that the market is going to try to rally again, but there are plenty of reasons to believe that there is resistance above. After all, the CAC is sensitive to risk appetite, so you need to be cautious about what you do if you are trying to buy into this market. After all, the CAC is heavily influenced by luxury goods, something that does not go well in times of recession or global slowdown.

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The candlestick for the trading session is somewhat bullish but still needs to pay attention to the massive resistance that I see based on the potential down-trending channel. There is a little bit of a downtrend based upon the 50-day EMA as well, so you should pay attention to that. It is at the €6434 level and dropping quite drastically. We had recently formed a “death cross” when the 50-day EMA drops below the 200-day EMA, and then a reluctance to try to break above the 50-day EMA. The entire area between the 50-day EMA and the 200-day EMA should be a massive resistance barrier that the market is going to struggle to break above.

If we were to turn around and break down below the €6200 level, it is likely that the market will drop to the €6100 level rather quickly. This is a market that I think will continue to see a lot of sellers, as people will be running away from risk appetite, and if Germany drops, so will Paris. During the trading session, Christine Lagarde suggested that perhaps the ECB would start to raise rates at a ¼ percentage clip, which could work against risk demand as well. Either way, we are in a decisively negative market, and I just do not see that changing anytime soon. I would be a seller of rallies but would also sell breakdowns below support. Further exacerbating trouble will be the energy problems in the European Union, as well as a war on the doorstep of the continent. In general, I have no interest in trying to get long.