Time to Start Looking at Trades... USD/JPY Update

One of the reasons this move above $102 was interesting was that it was very unlikely to hold, I just didn't know how long it would be able to hold.

As I said this morning (and this applies to just about every asset), the broken support of $102 from this week will likely be tested at least once, there may be some moves above and back below, it's what I call "lingering or loitering" and it often happens when important support (Especially) or resistance is broken, it's what TA would call a , "Test of resistance".

In any case, we saw some early signals this morning that this is a probability on the USD/JPY 1 min chart, the Yen 5 min chart and with the $USDX 5 min to a lesser extent. These charts could still dissipate, but I doubt they'll do so without a test at least. 

It's what comes AFTER the 5 min charts that tells me, "It's time to start looking at entering some of the larger primary trend positions, there has been some significant changes there and the FX side of things has really been the only support the market has received this week as expected last week.

It's also important to know that we are in pretty decent position to be looking at these positions, don't worry about where the USD/JPY is, take a look at the USD/JPY correlation on a 5 min chart.

ES (purple) needs to catch down to the USD/JPY correlation. I've seen ES break the correlation once to the downside and twice to the upside (once to the upside yesterday) and in each case they have been brought right back to the correlation as if it were a tractor beam. 

The current dislocation of ES, above the correlation gives us some decent short opportunities before it catches down to USD/JPY which I suspect will occur after resistance is tested and fails at least once.

As for those tests...

 This is the 1 min USD/JPY with an intraday positive divegrence and $102 marked at the red trendline, I think this is high probability and should move the market to give us some interesting entries.

Furthermore...I look at the individual currency components as always and here's what I found...

 The 5 min Yen is at a negative leading divegrence which would allow the USD/JPY to test resistance once it moves lower.

The 5 min $USDX is improving, but still negative, I think the improvement is for a test of $102 as mentioned.

However, this is kind of where this entire USD/JPY $102 episode sees a game changer...

 The charts beyond 5 min like this 15 min Yen chart are leading positive which would put pressure on USD/JPY lower and the market with it, the exact opposite of what we saw and what I said last week and it's not just a 15 min chart...

 The 60 min $USD was pretty strong, I thought it would take longer for it to start to turn negative, but it has already and the Yen 60 min was no where near being positive.

Now you see the Yen is quickly moving back in line which is all it needs, it may keep going to positive, sending the USD/JPY lower and Index futures with it, thus this is probably the right time to be looking for entries in to strategic/core positions (mostly on the short side).

I'll be thumbing through the watchlists again today after yesterday's incredibly flat day.