FXY Follow Up / Trade

There's no real great secret that I need to hide from you to try to impress you with foreknowledge of the market, my goal is to give you the tools to apply the concepts to your trading as you see fit.

So if we think about what is driving the market or will create change (whether short term so we can possibly enter 1-2 day calls/longs  or long term to enter shorts) there's either going to be the SPY arbitrage to send the market higher, in which case the relative performance of arbitrage assets vs the SPX and each other is one force that can move intraday trade. In this case you'd look for HYG's price to move up while TLT's and VXX's moves down, for a negative effect on the market, HYG moves down and TLT and VXX move up.

You can watch for that alone or individually with the next driver, ideally both work at the same time, the next is simply the USD/JPY currency pair, but to keep it simple you just need to watch the Yen, if you are charting futures, the symbol for the Yen in TOS is /6j if you are using ETFs, use FXY.

Here's both...

 Yen 5 min futures are topping short term and starting to make that turn, they are still up on a bounce this morning, but when that turns down it will relieve the downside pressure on the market.

The longer 15 min trend is cleaner, as the Yen has been bid, it's effect on the USD/JPY has been negative on the market, I showed this chart several nights ago just starting to go negative and now the divergence is in, we just need to see intraday trade turn down and that will set up the market for some short term strength, but I'd remind you it's so fragile that anything I entered would be speculative, leveraged because I suspect it doesn't hold long and stuff that I can get out of quickly, this is for the hitch-hikers, for those waiting for some price strength to short in to, just be patient, that's the real trade/market gift.

using FXY as a proxy for the Yen

 The 3C 5 min chart in line and then goes leading negative, it's almost like a small H&S at the top and this is part of why I said FXY short is a trade that would work with little risk.

The 3 min chart, I didn't draw on it, but the trend of 3C and the trend of price should show an obvious divergence, a stop can be place above the red trendline, but the less obvious it is, the better.

 The 2 min chart, so essentially this is very close to what might be considered a right shoulder in FXY, looks as if it's about to turn down (relieving downside pressure on the market.

This top of the left shoulder is also one of the only places I'll short a H&S pattern, keep in mind its size when considering the profit potential.

FXY in the trend channel shows a break below $101.25 should be close enough to creating a substantive change in the market that can be taken advantage of for short term action only.

I show the averages as starting to chop around so some of that downside momentum has been relieved, there's still a reversal process proportionate with the a.m. decline, but that's pretty much what to look for right now as far as steering currents and timing.