February 2nd, 2015 5:04am GMT, London UK Today’s Binary Options Trading Strategy:• Currency Pair: AUDUSD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 0.7670
• Upside Potential: The upside potential for this binary call option is 520 pips to 0.8190
• Downside Potential: The downside potential for this binary call option is 170 pips to 0.7500The AUDUSD plunged during today’s early morning trading session in Asia after the Reserve Bank of Australia surprised the markets with an interest rate cut of 25 basis points down to 2.25%. This extended the corrective phase which emerged after the AUDUSD recorded an intra-day high of 0.8295 on January 15th 2015 while this morning’s plunge reached an intra-day low of 0.7650. The AUDUSD is now in the process of creating a new horizontal support level from where it can reverse back into its descending resistance level.
Price action is now trying to stabilize inside its new horizontal support level where selling pressure is being deflated. The AUDUSD is likely to drift to the upside until it will meet its descending resistance level from where a breakout is anticipated. Binary options traders can take advantage from the expected breakout with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 0.7670 for a risk/reward ratio of 1.0/3.06.
The AUDUSD experienced a minor increase in volatility during the drop in price action, after a prolonged period of low volatility, which is expected to increase as sellers are likely to attempt a breakdown below its newly formed horizontal support level in order to extend the current string of losses in this currency pair. A false breakdown should not be ruled out, but buyers are anticipated to attempt a price action reversal from current levels in order to break the current corrective phase. This favors binary call options in the AUDUSD currency pair.
The first resistance level awaits the AUDUSD at its descending resistance level around the 0.7770 mark. This level represents a key battle ground for this currency pair. A breakout above this level is likely to accelerate the advance in the AUDUSD into its next resistance level at its intra-day low of 0.7858 which was reached on January 26th 2015. The next resistance level awaits the AUDUSD at its intra-day high of 0.8025 which was recorded on January 28th 2015 from where a final breakout will lead this currency pair to its descending resistance level around the 0.8190 mark.
The following economic data out of Australia already impacted the base currency, the Australian Dollar, of the AUDUSD currency pair:
Reserve Bank of Australia Interest Rate Announcement:
• Expectations: The Reserve Bank of Australia was expected to keep interest rates unchanged at 2.50%
• Previous Report’s Data: The Reserve Bank of Australia kept interest rates on hold at 2.50% in line with their pledged price stability
• Released Data: The Reserve Bank of Australia unexpectedly cut interest rates by 25 basis points to 2.25%
• Impact on the Australian Dollar: The reported interest rate cut has dropped the Australian Dollar into a new horizontal support level from where a price action reversal is expected which favors binary call options in the AUDUSD currency pair
In addition the following economic report out of The United States is expected to impact the quote currency, the US Dollar, of the AUDUSD currency pair:
Factory Orders for the month of December:
• Expectations: A monthly contraction of 2.2% is expected for December
• Previous Report’s Data: A monthly contraction of 0.7% was reported for November
• Impact on the US Dollar: The expected plunge in factory orders out of the US is anticipated to exercise downward pressure on the US Dollar; this favors binary call options in the AUDUSD currency pair