USD/JPY Price Analysis: Profit-booking drags near 123.00 on highly overbought oscillators

• USD/JPY has slipped near 123.00 after the profit-booking kicks in.
• The RSI (14) has turned overbought after printing fresh highs above 80.00.
• The horizontal trendline placed at 118.66 will act as important support.

The USD/JPY pair has eased modest gains after hitting a six-year high at 125.10. The asset has recorded a juggernaut rally of almost 7.8% in the last four weeks. The pair is likely to witness a pullback going forward as oscillators have turned highly overbought.

On Tuesday, the major has displayed a negative open rejection reverse move as the asset moves higher after opening gradually but faced significant offers after investors prefers a ‘sell on rise’ approach.

As per the weekly scale, USD/JPY has witnessed a firmer rally after a breakout out of the rising channel on the upside whose upper end is placed from 2 April 2021 high at 110.97 while the lower end is marked from 8 January 2021 low at 102.59. The horizontal line placed from 16 December 2016 high at 118.66 will act as major support.

The 10 and 20-period Exponential Moving Averages (EMAs) are scaling higher at 118.24 and 116.25 respectively, which adds to the upside filters.

The Relative Strength Index (RSI) (14) has printed a fresh high around 82.00, which indicates an overbought situation and sets a pullback going forward.

Should the major test its ground of five-year-old resistance at 118.66, a build-up of fresh bids will drive the pair towards the psychological resistance of 120.00, followed by a 5 February 2016 high at 121.49.

On the flip side, bears can take control if the pair slips below the 10 EMA at 118.24. This will drag the pair towards the 20 EMA at 116.25. Breach of the latter will send the pair towards the 3 March 2017 high at 115.50.

USD/JPY weekly chart