USD/JPY Price Analysis: Bulls inches near six-year-old resistance at 121.70

• USD/JPY may face the heat of an overbought situation but will remain a buy the dip counter.
• The asset may recapture six-year-old resistance near 121.70.
• Bulls are firmer above 10 and 20-period EMAs.

The USD/JPY pair is facing overbought pressures above 121.00 and is likely to perform subdued in the Asian session. The major has witnessed a dream rally in the past few trading sessions, which is visible from the full-bodied giant positive ticks on the weekly chart consecutively for three weeks. The greenback bulls are inching closer to six-year-old resistance at 121.70 considering a broader weakness in the Japanese yen.

On the weekly scale, USD/JPY has witnessed a juggernaut rally after a breakout out of the rising channel on the upside. The upper end of the rising channel is placed from 2 April 2021 high at 110.97 while the lower end is marked from 8 January 2021 low at 102.59. Moreover, the asset is holding above its five-year-old resistance at 118.66.

The Relative Strength Index (RSI) (14) is oscillating in a range of 60.00-80.00, which signals for the continuation of a bullish trend. However, an overbought scenario at this stage cannot be ruled out.

Meanwhile, the 10 and 20-period Exponential Moving Averages (EMAs) are aiming higher at 117.00 and 115.50 respectively, which adds to the upside filters.

Considering the overbought situation, the major may find some long liquidation and test its five-year-old resistance now support at 118.66, which will fetch some fresh bids that will drive the pair towards the psychological resistance of 120.00, followed by 29 January 2016 high at 121.67.

On the flip side, bears can take control if the pair slips below March 15 low at 117.70. This will drag the pair towards 10 and 20-period EMAs at 116.70 and 115.25 respectively.

USD/JPY weekly chart