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It came a day early — I charted it as Oct 8 back on the 25th [see: USDJPY’s Triangle Breaks] — but, today’s the day we find out whether or not our latest analog is worth a darn. Yes, the 50-day moving average will be tagged this morning.
Last night, the BoJ punted on additional QQE (at this time, as we expected) and USDJPY plunged back below the key 120.11 Fib.
After seeing the effect on stocks, though (ES was off 22 points from yesterday’s highs) it was quick to find its way back — and without even testing the bottom of the pennant pattern.
Thanks to that, as well as CL breaking to a new interim high [see yesterday’s post], ES ramped overnight to tag its SMA50. 
SPX will clearly follow along on the opening. The big question is whether or not it’ll stick.
continued for members…
Upside targets for SPX, then, are the SMA50 at 1998.25, the .886 at 2003.88 and the pink .382 at 2014.75.
SPX’s moving averages are still bearishly aligned, and a reversal at the .382 would make sense for a completed Bat Pattern down at 1856.
More shortly…
UPDATE: 10:03 AM
Remember, the white .886 at 2003.88 is still very much an option. So, any push higher than 1998.25 will likely land there. Mind your stops accordingly.
So far, USDJPY is supporting a reversal here with a break of the little red TL. But, it’s in full manipulation mode right now, so anything is possible.
UPDATE: 10:14 AM
USDJPY pushing back through that TL, SPX likely heading up to 2003.89. Manage your stops, as they could be planning to ramp it through both levels of resistance.
We know all about USDJPY manipulation…”back above the TL” could easily turn into “back above 120.11” for no reason whatsoever — purely to ramp stocks past 2003.
But, as we saw yesterday, CL is pretty good at ramping stocks, too. It’s up against a falling TL and could easily pop above it to try and reverse any serious declines.
UPDATE: 10:52 AM
Day traders take note: SPX just backtested the channel midline and SMA50. We could well get a bounce here up to the 5-min moving averages — 1993ish.
Swing traders take note: if the analog plays out, the next stop is 1930ish either Friday or Monday, followed by a drop through to 1887 next Monday-tuesday.
UPDATE: 11:13 AM
Tough call here…respect the TL or tag the SMA200? It could go either way, but USDJPY is slumping, so I’d go with the SMA200.
Bottom of the pennant in sight again.
UPDATE: 11:28 AM
About to pull the trigger, just waiting to see if ES tags its midline or not.
UPDATE: 11:30 AM
In case I forget to mention it later, wherever SPX ends up today, we still have the potential of the .886 up at 2003.88. One way to get there is to ramp it up overnight — particularly since USDJPY is nearing the pennant bottom.
It would make for a suckish opening tomorrow, but they do that a lot lately, right?
UPDATE: 11:45 AM
Might be all we’re going to get. Back to short if it dips below our entry.
UPDATE: 11:57 AM
UPDATE: 12:17 AM
I wouldn’t normally be so skittish, but we had lots of transactions last month that arose during the middle of the day, when there was no real direction and SPX was being driven by algos. I’d like to avoid some of those going forward, especially on days when we’ve already earned some nice returns.
UPDATE: 12:37 PM
Keep an eye on USDJPY, which should reverse at the channel midline if this is going to go.
UPDATE: 12:55 PM
USDJPY didn’t reverse at the channel midline, but is still thinking about it. SPX won’t go anywhere without it, so I’d let a breakdown of USDJPY’s purple wedge be the signal to consider short again.
My gut tells me it’ll be decided when the 5-min SMA200 reached that red TL at around 120.021 at 1:40ish. But, it could happen at any time — and, if/when it does, could also be a headfake.
UPDATE: 1:12 PM
UPDATE: 1:21 PM
USDJPY helping out, here. Now, if it can just drop through the SMA20…
UPDATE: 1:33 PM
Stopped out on the push through the midline/1988.12. Not sure I’d go long at this point, as USDJPY still hasn’t retaken the midline. But, I’d definitely go back to cash.