07.11.201808:45 Forex Analysis & Reviews: Global macro overview for 07/11/2018

The elections to the House of Representatives and to 1/3 of the Senate are held today in the USA. Markets should wait for results. Theoretically, if the Democrats win the majority in the House of Representatives (in the Senate it will almost certainly be impossible for them to do this), actions should react in declines, and if the Republicans win, they will increase. Surveys give an advantage to Democrats, but recent polls do not have any realities.

The Democratic House of Representatives would block neo-liberal moves by President Trump (for example, tax cuts), which the markets would not like. Impeachment, even with a democratic majority, will not be, but it will be catching a bunny - hitting the president in order to weaken him before the presidential election. A Republican majority in Congress would be delighted with Trump's economic moves and would be very pleased with the markets.

However, the truth is also that the Democratic House of Representatives may block "war" (it is a trade war with China) the impulses of President Trump, which in turn would very much appeal to the markets. Therefore, it must be assumed that after the election there will be quite a volatility, with a rather uncertain result, but the impulse coming from them will not last. The end of the year is not conducive to discounts, so it is more likely that after the election the correction will stop and the end of the year will be on the rise.

Let's now take a look at the SP500 technical picture at the H4 time frame. The market has definitely broken out above the 61% Fibo at the level of 272.95 and now is heading towards the next target at the level of 279.49. So far, the bulls have managed to make a new local high at the level of 275.27, but it looks like the move up is still on the table. The positive and strong momentum supports the short-term bullish bias. The nearest support is now the zone between the levels of 274.38 - 273.94.