June 19th, 2015 4:58 GMT, London UK
Today’s Binary Options Trading Strategy:
• Currency Pair: EUR/JPY
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary put options on rallies above 139.700
• Downside Potential: The downside potential for this binary put option is 660 pips to 133.100
• Upside Potential: The upside potential for this binary put option is 310 pips to 142.800
The EUR/JPY has enjoyed a powerful advance which took this currency pair from its intra-day low of 133.094 recorded on May 26th 2015 to its intra-day high of 141.052 which was reached on June 4th 2015. This level marked a false breakout above its horizontal resistance level and a drift to the downside emerged as a result. The move lower recorded an intra-day low of 137.974 on June 12th 2015 from where its ascending support level push the EUR/JPY back to the upside. This currency pair has now ran into its descending resistance level from where an increase in downward pressure occurred.
Price action is currently trading inside of its horizontal resistance level which is being enforced by its descending resistance level. The EUR/JPY is anticipated to breakdown below its ascending support level and accelerate to the downside. Binary options traders can take advantage from the expected breakdown with binary put options. Today’s binary options trading strategy suggests put options to be placed on rallies above 139.700 for a risk/reward ratio of 1.0/2.13.
A contraction in volatility accompanied the initial advance away from its horizontal support level, but the drift to the downside which followed the false breakout has resulted in an increase in volatility. The EUR/JPY is now trading inside of a narrow triangle formation and the intersection between its ascending support level and its descending resistance level is located just above its horizontal resistance level. There are a number of accurate option trading tools which suggest the next move from current levels will be to the downside. Buyers may attempt to extend the advance, but sellers are favored to successfully force a breakdown which can take this currency pair back down to its horizontal support level.
The EUR/JPY will face its first support level at its intra-day low of 137.974 which was reached on June 12th 2015. This level represents the low of its initial drift to the downside from where its ascending support level reversed the move. A breakdown below this level will take the EUR/JPY to its intra-day high of 136.408 recorded on May 29th 2015. This level marks the high of the first advance from its horizontal support level. The next support level awaits this currency pair at its intra-day high of 135.337 which was reached on May 22nd 2015 from where a breakdown will clear the path to its final support level located at its intra-day low of 133.094 recorded on May 26th 2015.
The following economic data out of the Eurozone is expected to impact the base currency, the Euro, of the EUR/JPY currency pair:
German Producer Prices for the month of May:
• Expectations: A monthly increase of 0.2% is expected for May, an annualized contraction of 1.1%
• Previous Report’s Data: A monthly increase of 0.1% was reported in April, an annualized contraction of 1.5%
• Impact on the Euro: The expected annualized deflationary reading out of German producer prices is likely to apply downward pressure on the Euro which favors binary put options in the EUR/JPY currency pair
In addition the following economic report out of Japan is expected to impact the quote currency, the Japanese Yen, of the EUR/JPY currency pair:
All Industry Activity Index for the month of April:
• Expectations: An increase of 0.3% is expected for the month of April
• Previous Report’s Data: A contraction of 1.3% was reported in the month of March
• Impact on the Japanese Yen: The anticipated increase in the All Industry Activity Index is likely to pressure the Japanese Yen to the upside; this favors binary put options in the EUR/JPY currency pair