All in all this chart is a fairly clean , but what has happened inside the flag is what really catches my attention and gives me more conviction that this chart wants to go higher. As you can see from 11/2013 to 01/2014 the CHF/JPY has been in a very strong uptrend creating our flag pole represented by the solid, vertical yellow line on the chart. Thereafter CHP/JPY begins to pullback, which is not only normal but very healthy.
I want you to notice the down move from 01/29/2014 to 02/04/2014 represented by the solid baby blue line. Then notice from 02/06/2014 to 02/11/2014 the down move was negated, creating a V-pattern represented by the other solid baby blue line. Once the V-shape is formed, a healthy pullback should be anywhere from 20-25%, as represented by our two dotted brown lines. If you look to the left you can see we get multiple touches on these two lines from dates such as 01/27/14, 01/20/14 and 01/13/14. By getting these touches, more and more conviction is built that the pullback after the V-shape is healthy. Now we measure where this V-pattern should reach by measuring the height of it from the open of 02/04/14 to our 20-25% retracement, represented by the pink dotted line. Then the line is duplicated and placed above the pink dotted line giving a target of about 115.205. Soon after it hits that target it proceeds to consolidate for a few days then go even high making our target of 115.205 (the pink solid line) .
Now lets fast forward to the present. This V-pattern is of such great importance to us because of the three pivotal levels it lays out. One being the low of the V-pattern shown by the solid blue arrow, which also represents the trend change. The next important level is the 20-25% V-shape retracement shown by the dotted brown lines. It is now currently serving as support and allowing the chart to create a higher low (red solid arrow) while holding in the flag consolidation (bottom yellow line). Lastly, is our solid pink line which was our V-pattern target. It is currently serving as resistance and when broken it should not only hold but it should allow CHF/JPY to break out of the consolidation, ultimately letting it go higher.
Finally, for the time being our target for CHF/JPY is 121.510 if it can break out of this consolidation. The target was formulated by measuring the width of the flag represented by the dotted green line. Then duplicate that line and place the bottom of it on the solid lower pink line where it should break out of the flag represented by the higher yellow line. If CHF/JPY can break 115.205ish and hold above that level while continuing to make higher lows this chart should have no problem hitting our lower end target of about 121.510.