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EUR/JPY’s previous 4-hour candle closed at 126.68, confirming an upside break of the sideways channel. Further, the relative strength index (RSI) on the 4-hour chart is reporting a flag breakout – a bullish continuation pattern.  

So far, however, the breakout on both the price chart and RSI has failed to accelerate the preceding bullish move from 124.27 to 126.57.  

That said, the pair is holding above the upper edge of the channel, meaning the breakout is still valid. Hence, a rally to resistance at 126.94-127.00 could happen in the next few hours.  

The bullish bias would be invalidated if the spot re-enters the sideways channel.  

4-hour chart

Trend: Bullish