The market opened above key inflection price level (support) on Tuesday, but a big gap-up opening for the Japanese Yen and the simultaneous massive sell-off in the US$ triggered some unwinding of the Yen carry trade, and it was too much for the market to bear, as it eventually broke below inflection price level, triggering a sell-off, closing just near the low of the day - a negative momentum going into the close.
Both NQ and ES closed just above key support level for Wednesday, 3545 for NQ and 1862 for ES.
-- Ability to stay above key support is an indication Tuesday's selloff has ended and that it is going into a pullback-up mode.
-- Trading below key support could trigger algorithm sell programs that could tank the market very hard. Support for NQ is 3480-3500, for ES the next support is 1830.
The Yen carry trade should continue to be a major influence on the market, A rally in Yen is bearish for the market, a pullback in the Yen is bullish for the market.
On Tuesday, Yen opened with a huge gap-up, and the US$ tank hard. - causing unwinding of the Yen carry trade.
