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BINARY OPTIONS STRATEGIES USDCAD

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By: Adam Stone
August 8th 2014 8:27am GMT, London UK
 
Today’s Binary Options Trading Strategy:

• Currency Pair: USDCAD
• Timeframe: H1 (Hourly Chart)
• Binary Option Trading Recommendation: Seek put options on rallies above 1.0945
• Downside Potential: The downside potential for this put option is 60 pips to 1.0885
• Upside Potential: The upside potential for this put option is 50 pips to 1.0995

The USDCAD has enjoyed an overall bullish move over the past twenty-four trading days which pushed this currency pair to a multi-month. The rally took the USDCAD from an intra-day low of 1.0620 reached on July 3rd 2014 up to an intra-day high of 1.0986 reached on August 6th 2014. The most drift higher was initiated after the USDCAD bounced off of its ascending support level. This support level has halted a bearish correction for the second time.

USDCAD

During the most recent part of the current rally from August 1st 2014 the USDCAD has formed a head-and-shoulders pattern which is a bearish chart formation and it suggests that a trend reversal should be expected. Binary options traders can take advantage from the expected reversal with a put option. Today’s binary options trading strategy suggests put options to be placed above 1.0945 for a risk/reward ratio of 1.0/1.20.

The left should of this bearish chart pattern was formed on August 1st with an intra-day high of 1.0944 after which a sharp reversal caused a false intra-day breakdown before price action resumed its rally. This currency pair then rallied higher and set a higher high which formed the head of this chart pattern with an intra-day high of 1.0986 on August 6th 2014.
The right shoulder of this head-and-shoulder chart pattern was formed today on August 8th with an intra-day high of 1.0948. Price action is expected to revers and enter a correction with its first test around 1.0930 where ascending support will meet sellers. A breakdown of this support level will clear a further move down to 1.0885 at which point the USDCAD would additionally form a double bottom.
The following economic data out of the United States is expected to impact the base currency, the US Dollar, of the USDCAD currency pair:

Non-Farm Productivity/Unit Labor Costs:
• Expectations: Non-farm productivity increase of 1.5% and unit labor costs increase of 1.2%
• Previous Month’s Data: Contraction of 3.2% in non-farm productivity and 5.7% increase in unit labor costs
• Impact on US Dollar: This is the preliminary reading for this data set and while an increase in non-farm productivity would be a positive sign the absence of wage pressures as measured by unit labor costs is expected to pressure the US Dollar lower which would push the USDCAD lower

Wholesale Inventories/Trade Sales:
• Expectations: Monthly increase in wholesale inventories by 0.7% in June and increase in wholesale trade sales by 0.8%
• Previous Month’s Data: Increase of 0.5% in wholesale inventories and 0.7% increase in wholesale trade sales
• Impact on US Dollar: An increase in inventories should be viewed with caution especially if trade sales do not move higher as well; put options in the USDCAD are recommended

In addition the following economic report out of Canada is expected to impact the quote currency, the Canadian Dollar, of the USDCAD currency pair:

Employment Data:
• Expectations: Job growth of 24,000 in July, unemployment rate of 7.1% and labor force participation rate of 66.1%
• Previous Month’s Data: Job losses of 9,400 in June, unemployment rate of 7.1% and labor force participation rate of 66.1%
• Impact on Canadian Dollar: Should expectations be confirmed the Canadian Dollar is expected to rally sharply which would push the USDCAD down and favor put options

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Adam Stone

As COO of GOptions, my first and foremost goal is to provide traders with the most up to date info from the markets. I have been trading the markets since 2004 and have been involved with stocks, binary options, and forex trading since then. I have had no formal market education and pride myself on a self taught approach to everything related to trading. I try to focus though on both the technical and fundamental aspects related to each trading day and bring forward the most important aspects of risk/reward in the market.
Adam Stone
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