USD/JPY Technical Analysis: Corrective rally likely after upside break of the falling wedge pattern

• The bullish divergence of the relative strength index (RSI), as seen in the hourly chart, indicates the pair could take out falling wedge resistance in the next couple of hours.
• Falling wedge bull reversal, if confirmed, would allow a stronger rally toward 111.13 (50-hour moving average).
• The bulls need progress soon as the pair is already trading below the all-important 50-day moving average of 110.88. A daily close below that level would confirm a bull-to-bear trend change, that is, the rally from the March low of 104.63 has ended.

Hourly chart

Spot Rate: 110.81

Daily High: 111.00

Daily Low: 110.71

Trend: Bullish above 110.87 (wedge resistance)

Resistance

R1: 110.87 (top end of the wedge)

R2: 111.13 (50-hour moving average)

R3: 111.30 (10-day moving average)

Support

S1: 110.72 (daily pivot support 1)

S2: 110.59 (July 26 low)

S3: 110.28 (July 4 low)