Yesterday went according to plan, with the initial and subsequent moves in SPX tagging both our purple and yellow initial targets. From the initial post (members section):

SPX might limit any initial weakness to 2064 or so — particularly if they’re able to hold the line on CL.  If USDJPY reverses, or CL continues to plummet, then we’re probably looking at 2057 (yellow dot) to flesh out the rising white channel.  In either case, the goal for bulls is to break through the white channel top and reach 2080.70 — the purple .886/1.272 combo.

We added the second purple target as a less likely option after the yellow target was nailed, but set our sights on the red target at 2080.70.  From the 1:30 update:

SPX just tagged our initial yellow target (I had been uncertain as to when it would happen, so drew two yellow targets this morning.)  I’ve moved our upside red target (2080.70) over to tomorrow morning, and added a the purple dot at 2053.54 as a potential downside target. I don’t see it as very likely…

As mentioned above, 2080.70 is the .886 retracement of the drop from 2093 to 1980, as well as the 1.272 extension of the latest, much smaller downturn.  It caught my eye when SPX bottomed at 2040 Monday afternoon — setting up an intersection between the two patterns.CL broke out of the falling red channel overnight — a net positive.

But, USDJPY gave up the critical yellow .618 Fib line at 120.11 — a real headwind for SPX.

Note ES’s behavior the last time USDJPY failed at this Fib line. Today’s targets coming up.  Continued for members...

Look for the initial spurt to get SPX up to the purple TL.  It might well require a second wave to reach 2080, if it’s to happen today.  The key, as yesterday, will be a strong recovery for USDJPY — which, so far, is looking rather weak.

In other words — the perfect setup for a pop and drop.  Watch USDJPY as it approaches that red, dashed TL on a backtest.  Trade safely.

UPDATE:  09:45 AM

USDJPY is coming up on that TL. A bounce would help SPX get the rest of the way to 2080 (2078.65 so far.)  Otherwise…

UPDATE:  9:58 AM

SPX just tagged 2081.75.  I’d want to be short at this point, with initial objectives of 2072 and 2068, but I’m a little nervous about USDJPY’s TL.  A nice bounce here, even if it fails to clear 120, would be problematic for bears.  Perhaps a tight stop — just in case.

USDJPY:

UPDATE:  11:28 AM

Okay, USDJPY has given up the TL and is pushing toward the upper bound of the broken triangle.  SPX should start heading south now, especially after the European close.