SP500 observation and USDJPY update.

The SP500 rally seems to have run out of steam for now. I think this is a corrective pause which could retrace further, I am thinking perhaps a dip to the low to mid 1160s on the e-minis, with perhaps an extension into the mid 1150s. I had expected some volatility and corrective price action ahead of the slew of news/data of the next couple of weeks, however I think the bigger bullish forces underlie this market for now and these should keep this from dropping too far.  I also want to highlight a similarity between the current 'Price action and momentum' set-up, and the set-up in April/May 2007 (See chart below - Click chart to enlarge).

The next two charts below show close-up views of these two highlighted areas.

Note the strong similarity between the two set-ups, this does not of course guarantee we will see subsequent price action of a similar nature, however I do believe that price action of a similar nature may be a strong possibility.

USDJPY FX

The USDJPY put in its first decent correction in some time yesterday, this came after Monday's closing level was within a whisker of the historic low closed on the USDJPY. Looking at the weekly USDJPY chart (See below) this week's low (so far) has occurred right on a major support level going back almost 10 years. I intend to look a little more closely at this in the next couples of days.

Finally in reference to yesterday's posting on the EURJPY; the follow through on the 6 hourly candles 'Three Black Crows' was weak, however the upside has also remained in check thus far.