USD/JPY has pulled back to 111.95, having tested Friday’s high of 112.10 earlier today.
The bearish divergence of the hourly chart relative strength index (RSI) indicates scope for a further drop toward the former resistance-turned-support of 111.82 (April 5 high).
Acceptance below that level would invalidate the bullish higher high and higher low pattern confirmed by Friday’s close at 112.05. It would also take the shine off the pair’s strong bounce from the 50-day moving average seen last week and the bullish crossover of the 50- and 100-day moving average (MAs).
However, the pair will likely set a four-month high above 112.14 (March 5 high) if the support at 111.82 holds ground, reinforcing the bullish case put forward by the MA crossover and Friday’s close at 112.05.
Trend: Bullish on the defense of 111.82