- A flag breakout seen on USD/JPY’s daily chart suggests scope for a rally to 110.80.
- The bullish setup would fail if the US-China trade talks collapse.
USD/JPY is currently trading unchanged on the day around 107.95, having hit a high of 108.31 at 00:55 GMT.
Despite the pullback, the outlook remains bullish, as the bullish breakout confirmed on Thursday is still valid.
The pair closed at 107.95 yesterday, confirming a flag breakout on the daily line chart. The pattern indicates the rally from recent lows near 105.00 has resumed and has created room for a rise to 110.80 (target as per the measured move method).
That target could be reached in the next week or two if the US and China announce a partial trade deal.
President Trump is scheduled to meet China’s Vice Premier Liu He at 18:45 GMT on Friday.
The flag breakout will likely fail if the trade negotiations end on a sour note, paving the way for further escalation of a trade war.