USD/JPY & Futures Charts

Here's the USD/JPY overnight doing EXACTLY what we suspected yesterday.

 This is the USD/JPY in red/green candlesticks and ES/SPX futures (E-mini) in purple, the correlation locally is of course still there, the larger correlation gives ES very little support as USD/JPY is quite a bit lower as you may recall from the 60 min chart posted yesterday (below).

60 min chart of USD/JPY in red/green candlesticks vs Es/SPX futures in purple, note the large dislocation with relatively little USD/JPY support, despite the intraday correlation above this chart.

There are a full set of USD/JPY / $USDX / Yen charts in yesterday's Daily Wrap, here are a few from YESTERDAY and the comments associated with them in "Italics".

" Unlike yesterday, there's no strong signal either way in USD/JPY right now which is why I look at the Yen and $USDX futures."

" Unlike yesterday, there's no strong signal either way in USD/JPY right now which is why I look at the Yen and $USDX futures."

As you can see, the $USD did turn lateral from down, which was all that was needed for the upside bounce or corrective move off yesterday's worst performance in 2 weeks. This allowed the USD/JPY to move laterally rather than down, an event we saw building all day yesterday, despite the market's underperformance.

For example from this morning's capture...

Above you can see the 10 a.m. lows in the USD/JPY fro yesterday morning and the USD/JPY losing downside momentum and shifting to lateral overnight (green arrow), taking Index Futures with it in a small bounce to the upside, again as expected yesterday.

Continuing with some charts from last night's Daily Wrap with commentary regarding the charts from last night in "Italics" ...

 "At the 5 min chart we have a negative yen so the near term probabilities favor more Yen weakness and USD/JPY bounce."

You may recall the little known Yen/Gold pairs trade, the weakness in the Yen sent GLD down from the 10 a.m. highs, around the same time the Yen saw weakness at its 10 a.m. highs and the USD/JPY's 10 a.m. lows. We'll look at the possibility of a trade there today, however it was only about a week and a half ago I closed the GLD short position for a small gain as the edge for the trade was no longer there and look at what has happened since.

The rest of the FX charts from last night showed the $USD either positive in the 1 and 5 min or neutral which is a short hop to positive, but not necessarily a guaranteed one. Likewise the Yen 1 and 5 min were negative. At the 7 min charts everything went to neutral as a transition point and all of the longer term charts after that favor a lower USD/JPY with stronger Yen charts and weaker $USDX charts, thus the USD/JPY is getting as I called it yesterday, a "Brief reprieve" and the Index futures with it.

Here are the charts captured just before the open of the current FX futures (single currency) as well as USD/JPY...

 Yesterday the USD/JPY 1 min, unlike Monday when it was clearly negative, was neutral. Today there's a bit more of a negative tone, although not quite as bad as Monday thus far.

 This 5 min chart of USD/JPY (candlesticks) vs ES (purple) shows the anticipated turn sideways and bounce from the lows.

Today I suspect, especially after 2 p.m., that the USD/JPY will have the most influence on trade.

 The 1 min $USDX chart just before the open gained ground since turning lateral which is what we expected yesterday, yet it doesn't have any meaningful divergences either positive or negative, it is just in line.

 The 1 min Yen Futures chart is also rather flat from the previous move up, several attempts at higher prices were blocked as you can see at the red arrows (negative divergences).

 Like yesterday, the $USDX chart has not capitalized of the 1 min turn to lateral and there's still no positive divegrence, this is why I suspected this move would be a short lived move before the FX pair and Index futures continue lower.

 And the 5 min Yen chart taking a breather from yesterday's up trend sending the USD/JPY and Index futures lower yesterday, it too is in line with no divergences.

Remember, this position of neutrality only existed on the 7 min charts yesterday, so that in itself is improvement as the Yen was more negative on the 5 min chart yesterday.

At the 7 min charts...

 $USDX has taken a more negative tone rather than the neutral tone seen yesterday.

And the Yen 7 min, rather than neutral as yesterday, has improved to a small leading positive divegrence.

The bottom line is this is the move in the pair and market we expected yesterday, we also expected it to be short lived and thus far the movement in USD/JPY, Yen and USDX has all moved toward our expectations of a brief move.

Now to get back to the market averages and see what we can expect moving forward as I do suspect this is a brief reprieve already showing signs of such and see what opportunities are out there. Remember the point of yesterday's QQQ Update & Trade Set-up post, use the information to your advantage.