Global macro overview for 09/02/2018

The stock market sell-off again starts in the same place - the VIX volatility index jumped over thirty points on Thursday, which became the catalyst for the next drop. On the currency market, we have a mix of abandoning the winnings of January's trade with the escape to safe havens. USD, JPY and CHF are holding good, but risky currencies are under pressure (mainly AUD, NZD, SEK, NOK). Yesterday, resistance was exhausted among investors in emerging markets who were patiently checking out the turmoil at the beginning of the week. This confirms analytic expectations that after the recent events the adjustment period will be longer than two sessions and there are still many positions on the market to reduce wherever positioning is extreme compared to historical standards.

The EUR/USD pair still defends the support level and did not extend the drops, but the capitulation of holders of long positions is still a threat. We are less than half of the growth correction since the beginning of the year and it may be naive to assume a perfect return at 1.20, this continuation of market perturbations will be for the course like an anchor - the rate might easily go down.

Let's now take a look at the Dow Jones Index technical picture at the H4 time frame. The price has broken through the nearest support at the level of 23,930 and now is heading towards the technical support at the level of 23,615 in extremely oversold market conditions. The RSI indicator is showing the strong downside momentum, but a bullish divergence starts to grow on this time frame.

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