Today during the American session the pair moved to the upside after a bullish bar on the four-hour time frame between the two red trendlines. It was a good enough signal for me to open long positions that I am still keeping open, since the pair continued moving to the upside and broke above the resistance trendline.
I have some doubts about whether the figure between the red trendlines can be called a flag, since one of its highs needed another 3,5 pips to reach the resistance trendline. But in Forex trading not everything is ideal and at the moment I am willing to interpret it as a flag.
If it is one then the limit of this figure should be 130 pips higher than the breakout level, which means that the pair has to reach 104.30 in order to reach said limit.
If the pair is really is renewing its move to the upside, it should break above the blue trendline and then we could expect a move to the upside towards 105.50 – 107.50, which is a resistance level from which USD/JPY could rebound from.
On the other hand the pair breaks above the blue trendline then we could expect it to reach the limit of the blue trend channel, the height of which is 470 pips and in that case the move to the upside will be considerable.