USDJPY breaks out of falling wedge, paving way to 137.5

The USDJPY had broken above the upper resistance band of a falling wedge which hints a bullish trend reversal. The Relative Strength Index (RSI) is also showing bullish divergence where prices created lower lows and RSI reading posted higher lows, adding validation to the potential move higher.

If price surpasses R1 at 134.45, we set our upside target at 137.75 (R2). In the meantime, we expect a corrective pullback to test support at 132.69 (S1).