Global macro overview for 18/08/2017

Global macro overview for 18/08/2017:

Increasing risk aversion is again becoming a leading reason behind the current financial markets behavior. The positive result season in the US has encouraged the continuation of the indexes to a historic high, but there are now no new reasons to buy stocks at the current levels. With so many valuations and strong buyouts, the lack of information is no longer good information. The global investors are faced with the possibility of reducing the balance sheet total by the Fed, which over time will include the absorption of gigantic liquidity excess in the banking sector. Moreover, next week the US and South Korean will join for military maneuvers that have been carried out in North Korea in the past, which increases and geopolitical uncertainty. Finally, the rumors that Gary Cohn, the head of economic affairs in Donald Trump's administration, was about to resign. Such a decision would further reduce the probability of tax reform and the implementation of the stimulus package. The rumor was quickly denied, but it was not going to stop the decline in the US stocks yesterday, which also shows the strength of the supply side on Wall Street. This week close in the US markets might be very important for both bulls and bears.

Let's now take a look at the SPY technical picture (SP500 ETF) at the H1 time frame. The golden trend line dynamic resistance was strong enough to push the prices lower towards the unfilled gap between the levels of 244.65 - 245.54. Currently, there is only one gap left to fill, between the levels of 242.78 - 243.31 and this gap will act as a very important support zone for both bulls and bears.

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