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:
- Trump emphasizes “not friendly” attitude towards China
- U.S. gov’t strikes historic deal with Middle East allies
- Asian shares mostly in the red on Chinese data dump misses
- NZ gov’t extends lockdown restrictions in Auckland as country reports 12 new cases
- RBA Governor Lowe says AUD exchange rate needs to be lower, but intervention would not be successful
- Chinese fixed asset investment down 1.6% as expected
- China’s industrial production up by 4.8% vs. 5.1% forecast
- Chinese retail sales slumped 1.1% instead of posting 0.1% uptick
- Japanese tertiary industry activity index rose 7.9% vs. 6.4% forecast
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
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!