The USD/JPY pair is one of the quietest pair of the FX dashboard lately. This is unusual for a major pair, especially considering the fact that this week the Bank of Japan released its monetary policy. On top of that, the central bank also released the quarterly outlook for the Japanese economy, a report closely watched by JPY traders.
The week started with interesting news regarding the Bank of Japan. Rumors have it that the bank is ready to let long-term yields rising again, a move that signals that it is willing to let the yield curve control go. Remember that the Bank of Japan is the only major central bank in the world that uses yield curve control, and a move like this would definitely move the JPY.
USD/JPY Technical Analysis
A bullish flag is a continuation pattern. It forms either on the horizontal or against the initial move. In this case, the flag formed against the initial move but still remains valid as a continuation pattern. Bulls may want to wait for a break above the upper edge of the flag before going long for the measured move with a stop at the lower edge. As a clue on how to follow the price action, bulls might consider the time it took the flag to form and project it on the right side of the chart – the market should reach the target in less than the time it took the flag to form.