Vertical upward movement on the USDJPY, which lasted from early November stopped in mid-December. The graph created a flag formation, which suggests that growth will continue. Yesterday and today bulls were trying to break the upper limit of the flag but failed again and the price returned to the interior of the formation.

On the horizon in front of demand are two serious threats. The first is high 118.70, which has already been tested twice in recent weeks. It also level of resistance, which was created in the years 2014 – 2015. The second threat is the lack of a clear correction in USDJPY after traveling vast distance from 101.18 to 118.65.

A bundle of these two factors may result in that that flag despite its technical meaning as continuation of the trend formation can be broken down. If a correction starts downward movement should test the support level of 114.00. It would be abolition of 23.6%, although it is more likely that if the drops occur their coverage will be greater.

USDJPY H4
USDJPY H4
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