USD/JPY Is Headed For The Resistance Trend Line Of The Channel

The expected rally of the USD/JPY pair became a reality, and said rally turned out considerably stronger than what was expected initially.

If we examine the W1 time frame we cannot fail to notice that what the pair is forming strongly resembles a flag and the pair has reached its trend lines four times – twice the resistance and twice the support trend line. The figure, however, is rather deep so I’d rather not actually call it a flag.

It appears that the pair is headed for the resistance trend line for a third time. It is possible to form a correction to 108.00 before it tests the resistance.

In the alternative scenario the pair will continue directly to the resistance trend line.

The more interesting question is, I think, whether the pair will break out above the resistance trend line. If that happens, we could expect a serious continuation of the upward movement. The height of the channel at its base is 1000 pips, but whether the pair could reach that limit is another matter, which is up for the market to decide.