October 16th 2014 5:23am GMT, London UK
Today’s Binary Options Trading Strategy:
• Currency Pair: AUDUSD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary put options on rallies above 0.8790
• Downside Potential: The downside potential for this binary put option is 140 pips to 0.8650
• Upside Potential: The upside potential for this binary put option is 90 pips to 0.8880
The AUDUSD has moved violently in both directions as economic data out of Australia rallied the Australian Dollar while economic data out of the United States pushed this currency pair both ways, but with an overall bias upward. The volatile trade experienced by this currency pair did record a lower high which suggests that a reversal may be the next move for the AUDUSD. This currency pair has moved higher from an intra-day low of 0.8651 which it reached on October 13th 2014 while it reached an intra-day high of 0.8860 yesterday on October 15th 2014.
Price action has retreated from its most recent intra-day high amid volatile trade. The AUDUSD may drift higher until it reaches its descending support line from where it is expected to move lower and test its next horizontal support level. Binary options traders can profit from the expected move lower with binary put options. Today’s binary options trading strategy suggests put options to be placed on rallies above 0.8790 for a risk/reward ratio of 1.0/1.56.
Traders should expect volatility to increase as price action approaches the descending resistance line from where buyers are expected to attempt a breakout in order to extend the upward move while sellers are expected to step in and reverse the current move higher. The descending resistance line has merged with its horizontal resistance line which has created a solid resistance level. Sellers are likely to use this as a platform to reverse the most recent gains. This favors binary put options in the AUDUSD currency pair.
The move lower is expected to take the AUDUSD back down to its horizontal support level with an intra-day low of 0.8651 which it reached on October 13th 2014. The price action reversal will not face any major support levels on its way lower. Traders may face a choppy move lower as minor economic data could impact the reversal, but the overall downtrend is expected to materialize until the AUDUSD tests its horizontal support level once again from where a double bottom formation may emerge.
The following economic data out of Australia already impacted the base currency, the Australian Dollar, of the AUDUSD currency pair:
Consumer Inflation Expectations for the month of October:
• Expectations: An increase of 3.6% was expected for the month of October
• Previous Report’s Data: An increase of 3.5% was reported for September
• Released Data: An increase of 3.4% was reported for October
• Impact on the Australian Dollar: The slowdown in inflation expectations has started to push the Australian Dollar lower and is expected to continue which favors binary put 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:
Philadelphia Federal Reserve Index for the month of October:
• Expectations: A monthly reading of 20.0 is expected for October
• Previous Report’s Data: A monthly reading of 22.5 was reported in September
• Impact on the US Dollar: The expected contraction in the Philadelphia Federal Reserve Index is likely to exercise downward pressure on the USD Dollar; this favors binary put options in the AUDUSD currency pair