USD/JPY Update

And what of the Carry Trade, USD/JPY which was a big part of any potential base after it broke down hard when stops were triggered under $103 on Monday, losing 281 pips since 8:30 Friday morning?

We know the Carry correlation algos were shut off to keep the market from following the USD/JPY lower, but something strange happened this morning, I suppose around the time the head FX traders wandered in to the office...

 USD/JPY in the green/Red bars has been slammed and the correlation Algos that keep Es and one of the 3 Carry trades (usually USD/JPY) in lock step, nearly tick for tick, were shut down and remained shut down all week, I checked all 3 Carry trades, all were shut down.

Until... around 7:30 this morning...That's ES in purple trading nearly tick for tick with the USD/JPY which is something I was looking for as they may not want the market to fall in a disorderly manner so early and thus shut down the algos. but I had a pretty strong gut feeling they'd turn them back on to help lift the market if there were to be any kind of bounce off a "W" base, THE MARKET NEEDS EVERY LEVER IT CAN GET TO PUSH UPSIDE MOVES AT THIS POINT.

 Remember we were looking for a lateral base in USD/JPY, this 30 min chart shows just that.

As far as analyzing the pair, we get much better signals looking at the single currency futures of the components (USD and JPY)...

 The 30 min Yen chart is showing distribution which has migrated from 5 min to 15 min to 30 min this week, meaning the divegrence is getting stronger as the pair bases laterally. With the pair USD/JPY, any downside in the Yen pressures the USD/JPY pair to the upside and any upside in the $USD also does the same so we would want to see $USDX confirmation in the form of a positive divegrence...

Here's the 30 min $USDX with a leading positive divergence, exactly what we were looking for to occur.

Meanwhile intraday the $USD is seeing a little steering distribution, likely to keep it in the range and if the Index futures are now plugged back in to the carry trade moves, they'd likely want to hold those flat as well until about 2 p.m. on an op-ex Max Pain Pin.

This is starting to get interesting and looking like we may have some trade opportunities worth more than just 3 hours.