With the BOJ meeting coming up, I expect that will eventually be a short term positive catalyst, at least that's the assumption, that Kuroda will give the market more guidance and confidence on their QE program, however with almost all central Bank policy announcements, there's an initial knee-jerk reaction, and then the market typically reverses as it settles in.
I'll post the market update next which is very interesting, I just want to make sure there are no surprises as there are a few signals in Currency that have me watching close.
First the main risk driver, the USD/JPY.
This single chart is the source of my concern, not overwhelming, but something out of the norm and I watch all of these things as close as I can.
For the market to move down (and I'll show you why it would and why that move would be contained in the next market update after this), the USD/JPY has to move down and this 1 min chart (the weakest, but also the closest to actually making a move, is showing a leading positive divergence, since the market moves typically with the FX pair, that divergence is signaling a short term intraday move to the upside, but it doesn't need it. This is why I'm curious about this signal.
The more important USD/JPY 5 min chart shows the negative divergence I'm expecting based on the market charts, this is the short term move down to suck in bears I've been expecting, however somethings in the market have already happened today that would bring the bears in, again in the next update.
Looking at the single currency futures for a hint, this is the USD 1 min, it's pretty much in line and not telling us much.
The 5 min is negative as I'd expect.
The 15 min is negative as I'd expect, this should help bring the pair down and the market with it.
The Yen 1 min has a small negative divergence right now, not very big and the $USD is in line so again this 1 min timeframe isn't saying much and it is where I have the concern over the USD/JPY 1 min.
Yen 5 min has a large positive divergence, this brings the USD/JPY down which is what I'm expecting short term.
And the Yen 15 min chart is also positive at about the right size for the move I'm expecting, so everything seems pretty good except that 1 min chart leaves me with some questions.
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