Yen based Carries/FX may be changing soon

The BOJ came out last night with their version of the "Bazooka" or as some described the balance sheet expansion as , "Shock and awe". The initial knee jerk was seen last night when I was posting virtually in real time as the Yen was crushed lower, but as with all Central Bank knee jerk reactions, we have to remember they often are just that, knee jerk and now that the Yen has priced in the policy expansion, the market will start to discount the South Korean race to debase and how it will pressure the Yen higher, in fact it already looks like we are seeing signs of that now.

Keep in mind, in the single currency futures, there's very little 3C movement in either the EUR or $USD so there's not much underlying movement in the EUR/USD, but more importantly on the subject of the carry pairs, the movement in EUR/JPY and USD/JPY is ALL YEN BASED. For FX traders, I think we are going to see some downside reversal in both pairs.

 EUR/JPY 1 min last night, this is the 8 hours of accumulation BEFORE the BOJ policy announcement, you can tell when that was by price action.

 This is the EUT/JPY now, a 3C negative divergence already sent the pair consolidating sideways, now the divergence is worse, I think the pair reverses to the downside.

For Equity traders you can short FXY to take advantage of this signal.

 USD/JPY currently with a negative divergence also sending the pair sideways and an even worse leading negative divergence that should send the pair lower.

 As proof the movement is in the Yen and not the EUR or $USD, here's the single currency Yen futures, there's an obvious positive divergence that should send the Yen higher, thus the EUR/JPY and USD/JPY lower.

Here's the 5 min Yen chart, it is going to a relative positive divergence just as the Yen made a new low for the week.