The Expectation For An USD/JPY Rally Remains Valid
Today, right after the market opened, USD/JPY pair broke out above 114.50 as it was long expected to and reached 114.736. It is obvious that the speech by the Bank of Japan governor had a strong effect. However, right after that the pair dropped sharply back to 113.952. Apart from that, we can also observe an RSI divergence between six highs on the H4 time frame. Should the pair reach the limit of this strong divergence it could fall to 112.56.
Despite that my expectation (as well as the general expectation) that the pair will resume its rally remains valid and the first target should be around 115.50.
For a confirmation for that scenario we should observe the RSI indicator and we should watch out for a breakout above the red line of the divergence in particular. Such a breakout would be an additional signal for such a rally.