Market Update

It seems to me the theory proposed earlier (Market/FX reversion to correlation) is still underway.

 Since yesterday's close, when zoomed in the Euro (red) is making higher highs/higher lows as the market seems to try to stay in a holding pattern, apparently hoping the Euro will make the trip up rather than the market making the trip down. Europe is closed now, but as you will see there are some resistance areas for the Euro right now. We'll see if the Euro up, after the European close holds water today, I suspect that is what the market is waiting to see as well.

 The true depth of the divergence in the correlation, as mentioned, yesterday's rally in the afternoon got ahead of the legacy arbitrage correlation.

 SPY 2 min isn't going anywhere right now, each move up sees an intraday negative divergence, apparently not wanting to let this divergence between FX and the market to grow even wider which would create a lot more instability.

 The Euro/FXE 2 min today saw a negative divergence at the intraday highs, I'll show you why.

 The Euro/FXE 3 min chart is still leading positive (white box) and the intraday action is exactly in line with price (green box).

 Euro- 5 min is still leading positive, it hasn't moved around like the shorter term charts, I suspect the divergences aren't strong enough to show up here as of yet.

 ES trade.. Again it seems like there's a range that is attempting to maintain.

Here's a close up of the EUR/USD since the NY open at the lower green arrow. Remember in the earlier charts I showed you support (the long term downtrend line) and near term resistance (horizontal trendline), the Euro is stuck between the two in its own little consolidation, it will need to break out above resistance or the market will have to come down to meet it or maybe a bit of both-"meet you halfway".

That appears to be what is driving trade this morning and in to the early afternoon.