USD/JPY Price Analysis: Eyes to recapture six-year high at 125.10

• The exploding of the Darvas box chart formation has imbalanced the asset.
• Advancing 20 and 50-period EMAs claim that the upside is intact.
• The RSI (14) has settled in a bullish range of 60.00-80.00.

USD/JPY has reached a state of imbalance, and it is on the verge of reaching a new six-year high of 125.10, which was set on March 28 after auctioning in a narrow-range box. On Tuesday, the pair saw a bullish open rejection-reverse session, with the asset moving down after initially starting at 122.80 pips. The major, on the other hand, was subjected to substantial bids to the vicinity of 122.38 as investors decided to 'buy the dip' strategy.

When viewed on an hourly basis, the structure shows a stronger breakout of a Darvas box chart pattern, which is depicted in the region of 121.30-123.00. Because of the explosion of the Darvas box chart pattern, the volume and volatility of the market have both increased significantly.

The 20- and 50-period Exponential Moving Averages (EMAs), which are now at 123.35 and 123.00, respectively, are continuing to climb higher, indicating that a bullish bias is still in place.

Meanwhile, the Relative Strength Index (RSI) (14) has comfortably settled in a bullish range of 60.00-80.00, indicating that more increases are likely in the near future. -

An overbought condition above the round level resistance at 124.00 would send the asset to 125.10, the six-year high from June 2013, and then to 125.86, the all-time high from June 2015.

On the contrary, if the yen falls below the 50-day exponential moving average (EMA) around 123.00, the bulls will have the upper hand. If this happens, the asset will be pushed towards the March 29 and March 30 lows, which are respectively 121.98 and 121.31.

USD/JPY hourly chart