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I’ve got my eyes on this simple uptrend correction setup on the 1-hour chart of EUR/JPY today.

Think buyers are ready to return soon?

Before we talk chart levels, lemme show you the biggest headlines from the Asian session:

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Upcoming Potential Catalysts on the Economic Calendar:

  • Swiss PPI at 6:00 am GMT
  • Eurozone flash employment change and GDP at 9:00 am GMT

What to Watch: EUR/JPY

EUR/JPY 1-hour Forex Chart
EUR/JPY 1-hour Forex Chart

Risk-off flows returned earlier today as traders were disappointed by most of China’s data points.

This was bullish for the lower-yielding yen, which managed to recoup some of its losses versus the euro. However, the upcoming trading session could see strong figures from the region and allow the EUR/JPY uptrend to resume.

The 100 SMA is still above the 200 SMA to confirm that the rally is more likely to resume than to reverse. In addition, the gap between the moving averages is widening to reflect strengthening bullish momentum.

Stochastic is on the move down, though, so the correction could keep going until oversold conditions are met. If so, the Fib levels could bring in more bullish energy.

In particular, euro bulls might be hanging out around the 61.8% level closest to the rising trend line, 200 SMA dynamic inflection point, and a former resistance area.

If you’re hoping to catch a bounce off this pair, make sure you look at the average EUR/JPY volatility when setting entries and exits!