USD/JPY Technical Analysis: Flag breakout may remain elusive or fail if yield spread extends Monday' drop

The USD/JPY pair has created a bull flag on the hourly chart-  a bullish continuation pattern which often ends up accelerating the preceding bullish move. 

A move above 111.92 (flag resistance) would confirm a breakout and open the doors to 113.00 (target as per the measured move method). 

The flag breakout, however, may not happen or could end up trapping the bulls on the wrong side of the market if the spread between the 10-year US and Japanese government bond yields extends the four basis point drop seen yesterday. 

As of writing, the pair is trading at 111.87 and the spread is seen at 272 basis points. 

Hourly chart

Trend: Bullish