USD/JPY / Market Update

As explained this morning in the A.M. Update , specifically the Yen & $USD and USD/JPY as well as how that effects the Index futures,I expected some short term Yen weakness, some short term $USDX strength, thus USD/JPY short term strength that helps the index futures as we still should see the averages' 5 min charts go negative, as explained in the last post, Early Indications.

I'm seeing the ingredients now that are needed for this scenario to play out with some short term strength or at least price in the area to create the reversal process as the 1, 2, and 3 min charts get progressively more negative and turn the 5 min chart which went positive yesterday , back to negative, which is where we want to short in to price strength and be ready for the market to continue lower.

The charts I'm talking about as recent evidence and the way they influence the market short term via USD/JPY...

 Yen Currency futures now showing a negative divegrence intraday on the 1 min chart, remember it was Yen strength overnight and USD/JPY weakness sending the Nikkei 225 lower by -2.25%. Also the USD/JPY sent the Index futures lower both pre-market and in morning trade. Although , as I said I do expect some short term strength (even in last night's posts) , the highest near term probabilities are for the market to continue lower as represented on the 7 minute charts from this morning's A.M. Update not to mention the even stronger probabilities of the MACRO TRENDS expected (weak $USD, strong Yen, Weak USD/JPY, weak SPX, Russell 2000 and NASDAQ 100 futures).

In addition, the $USDX is showing a 1 min positive divegrence as expected. Between a weaker Yen (short term) and a stronger $USD (short term), they should send the USD/JPY higher (short term) and pull index futures with it (again... short term). These are all expectations not only from last night, but more specifically this morning's A.M. Update

 The $USD/JPY 1 min overnight seeing downside with 3C confirmation (green arrow), which has now turned to a small positive divegrence as would be expected with the Yen and $USDX divergences above.

How the USD/JPY carry cross effects Index Futures (ES/SPX E-mini futures)...

 This is the market close yesterday with USD/JPY as red/green candlesticks and ES (purple line).

Note the tight range in ES last night, that's when I posted, Index Futures last night as they were getting ugly. The USD/JPY broke down first, but it didn't tale ES / Index futures long to follow...

And here's the rest of the night and pre-market to the present with USD/JPY and ES correlating beautifully since around 7 a.m. EDT.

So I do expect a bounce intraday as I have said since last night and I expect the charts to continue to deteriorate which makes for a good area to sell short in to strength before the next move to the downside begins which is the highest probability as we have close to a full house across multiple timeframes and multiple assets, all negative, we just need some short term positives from yesterday mostly on 5 min charts to turn negative and they are most likely to do that in to some intraday strength which I believe is about to start, which also gives us a great opportunity with short trades as they come to us at better prices, lower risk and we have confirmation of the charts turning negative which also gives us better timing in our entries.

However, if it starts to look like the market is just going to run over those divergences and move down I'll let you know, although I suspect most of you are already positioned as I have been.