FX Update

The USD/JPY and the divergences in the single currency futures are probably one of the best reasons to suspect an bounce we can short in to. Right now there are divergences (positive ) in the USd/JPY, however I get better information looking at each currency individually, it's not so much $USD strength as it is short term Yen weakness, which would also fit with a "bounce" in the market as the 3C weakness in the Yen is "short term".

 THis is the correlation between the USD/JPY (red and green candlesticks) and ES / SPX Futures (
purple line).

Thus wherever the USD/JPY go, Es is sure to follow or something close to that.

 This is the 1 min USD/JPY with a sharp negative divegrence , I see this as distribution as the pair moved higher because everyone in FX knows $102 is the key level, look at the highs this morning where USD/JPY pulled back, EXACTLY at $102.

A breakout however above $102 would send the pair higher and drag index futures with it, but remember it still looks like it would be a short term move because the Yen negative divergence only extends so far.

This is the larger 5 min USD/JPY 3C chart and it looks like it's putting a small base together.

This is the $USD, it had a negative divegrence in to early trade, but that has resolved with 3C making a higher high, but as I said, "it's not so much about $USD strength as Yen weakness".
 

The 1 min chart of the Yen shows a slight negative divegrence forming, but this is only really important for timing, the signals that would move the Yen lower and the USD/JPY higher are on longer charts.

Like this 5 min that's leading negative and especially...

This leading negative 15 min, it's not a huge negative divergence and at 30 mins the Yen is in line, but this would be enough to send the Yen lower, the USD/JPY higher and break $102 and pull index futures up with it, I think that is why we are seeing the positive divergences (although still pretty weak) in the market averages.