USD/JPY Forecast: Bull RSI Divergence Confirmed, Still Too Early To Call Bottom?

• The daily RSI shows bullish trend reversal. 
• Still too early to call a bottom as the key descending trendline hurdle is intact. 
• Further, USD/JPY is at the mercy of the US stocks. 

The 300-point rally in the Dow lifted the USD/JPY pair above the 100-hour moving average (MA), confirming a bullish price-relative strength index (RSI) divergence. 

Daily chart

The above chart shows-

• Bullish price-RSI divergence marked by lower lows on price and higher lows on the RSI. It indicates a short-term bullish trend reversal. 
• The descending trendline (drawn from Jan. 8 high and Feb. 2 high) resistance is intact. 
• 5-day MA and 10-day MA trend south, indicating bearish setup.
• Bearish crossover between 100-MA and 200-MA. 

View

• The chart continues to favor the bears, except for the bullish price RSI divergence. So it is too early to call a bottom. That said, a close above the descending trendline resistance would add credence to the positive RSI divergence and open doors for 107.91. 
  Only a convincing move above 107.91 would mean the sell-off from the January high of 113.39 has ended and the tables have turned in favor of the bulls. 
• On the downside, a close below 105.25 (Friday's low) would shift attention to 103.74 (May 2013 high). 

Also, the recovery in the USD/JPY will likely be short-lived if the US stocks report losses today. As of writing, the S&P 500 futures are flatlined and with trade war talks in the air, the equities could turn red anytime, hence USD bulls (JPY bears) need to be cautious.