Late Day Thoughts

That "W" range I suggested as a possibility last night in the daily wrap looks more like a probability, the 1 min Index futures are negative or negative enough to make the move, however the 5 min charts are fine, not negative.

What matters the most right now continues to be the $USD/JPY and from what I can see, there's a very week 1 min (barely) positive Yen and price's ROC on the downside has faded so I'm thinking that's going to be responsible for dropping the market toward the lows of yesterday forming a "W" base.

At 5 mins the Yen is weak and negative and the $USD is where it needs to be. The VIX futures are also very weak at 5 min, I thought I might get a short there today, but I think I'll wait until tomorrow.

Bottom line is I think the market makes something like a "W" base which is about a day longer than a "U" in this situation, but a lot stronger as well. After that, everything is in position for it to blast to the upside (weak Yen and strong dollar charts past 1 min, weak VIX futures past 1 min, Treasuries, etc).

This really makes the most sense visually from a 1-day chart.

We have the range where most of the work was done (the red trendlines), then Monday's big day down which would have cleared the stops and sent all of retail chasing the market short.

Today's candle with yesterday's forms a Bullish Harami Reversal or what the Japanese call "Mother With Baby". The most common confirmation candle of that pattern is a gap down (which I drew in tomorrow's candle at the yellow arrow) which would give us the "W" bottom and a move to the upside above today's close which forms a bullish engulfing candle and confirmation of the reversal formation that's in place today.

I think that's the easiest way to visualize the set up and the Currencies as well as other correlated assets all are perfect for confirmation of this move.

That would mean that tomorrow morning would likely be pretty busy.