USD/JPY: levels to watch after latest Bull Flag move by Mary McNamara

I wrote an article last week following up on the U/J and warning traders to look out for any new ‘Bull Flag’ breakout. This article can be found through this link. The pair has moved on over 40 pips since that bullish breakout and it is now butting up against the next resistance level in its pathway; the 104.5 level.

U/J 4 hr: showing the recent 4hr chart ‘Bull Flag’ move:

UJ4

U/J daily: the daily chart shows this latest 4 hr chart flag move as part of a larger triangle breakout. This triangle breakout move has now given up to 150 pips. This chart also shows the looming resistance at 104.5:

UJdaily

U/J weekly: This chart shows the triangle breakout move more clearly. It also shows that the next major resistance level after the 104.5 is up at 105.5. The 105.5 level is the 61.8% fib level of the major 2007-2012 bear move and, thus, is very significant:

UJweekly

U/J monthly: this chart gives a better perspective of the 61.8% fib level. The 78.6% and 100% fibs would be further targets after this. The monthly chart also shows these recent triangle breakouts as being part of a larger, monthly-chart bullish ‘Cup ‘n’ Handle’ pattern. The target for this pattern is way up at 124!

UJmonthly

Cup ‘n’ Handle pattern:

Cup'n'Handle

The U/J is trading above the Ichimoku Cloud on the 4hr, daily, weekly and monthly time frames which is bullish and supports continuation. The obvious caveat here would be that Yen strength would be expected with any escalation of geopolitical tensions and this could undermine this current technical move. ‘Fundamentals’ do tend to trump ‘technicals’ in crisis situations.

Summary: the U/J has held above the 104 S/R level and is currently negotiating 104.5. The next key levels to watch, following any potential bullish continuation after 104.5, include:

  • 105 (whole number: in fact all whole and half numbers)
  • 105.5: being the 61.8% fib level of the 2007-2012 bear move.
  • 113.7: being the 78.6% fib level of the 2007-2012 bear move.
  • 124 region: being the 100% fib level of the 2007-2012 bear move.

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