October 17th 2014 5:31am GMT, London UK
Today’s Binary Options Trading Strategy:
• Currency Pair: EURJPY
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 136.000
• Upside Potential: The upside potential for this binary call option is 400 pips to 140.000
• Downside Potential: The downside potential for this binary call option is 200 pips to 134.000
The EURJPY has been in a prolonged downtrend which led to the creation of a bearish price channel. The downtrend began after the EURJPY recorded an intra-day high of 140.213 on September 23rd 2014 which took this currency pair to an intra-day low of 134.136 yesterday on October 16th 2014. The EURJPY is currently in the process of creating a new horizontal support level from where a breakout may develop which will take this currency pair back into its horizontal resistance level.
Price action is currently trading near its descending resistance line, but could be pushed lower one more time in order to test its new support level before it will attempt a breakout above its bearish price channel. Binary options traders can profit from the anticipated breakout with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 136.000 for a risk/reward ratio of 1.0/2.00.
Volatility has been relatively contained during the move lower, but traders should expect a sharp increase in volatility as the EURJPY will attempt a breakout above its bearish price channel in order to reverse the downward momentum. Sellers are expected to keep downward momentum alive and guide price action lower inside its bearish price channel. Buyers are expected to use the horizontal support level as a platform to stabilize the correction and attempt a breakout. This favors binary call options in the EURJPY currency pair.
The EURJPY will face its first resistance level at its intra-day low of 136.555 which it reached on October 7th 2014. This represents a level prior to its false breakout above its bearish price channel. A successful breakout will take this currency pair to its intra-day high of 137.936 which it reached on October 8th 2014. The next resistance level is located at 139.129 which is an intra-day high reached on September 29th 2014. The final resistance level awaits the EURJPY at its intra-day high of 140.213 which it reached on September 23rd 2014.
The following economic data out of the Eurozone is expected to impact the base currency, the Euro, of the EURJPY currency pair:
Eurozone Construction Output for the month of August:
• Expectations: A monthly increase of 0.1% is expected for August, an annualized increase of 0.4%
• Previous Report’s Data: A monthly reading of 0.0% was reported in July, an annualized increase of 0.4%
• Impact on the Euro: The expected monthly increase in construction output out of the Eurozone is likely to lift the Euro which favors binary call options in the EURJPY currency pair
In addition the following economic report out of Japan already impacted the quote currency, the Japanese Yen, of the EURJPY currency pair:
Foreign Bond & Equity Transactions by Japanese traders for the week ending October 10th 2014:
• Released Data: Bond purchases worth ¥796.0 billion, equity purchases worth ¥1.7 billion
• Previous Report’s Data: Bond sales worth ¥168.6 billion, equity purchases worth ¥439.0 billion
• Impact on the Japanese Yen: The reported increase in bond purchases and slowdown in equity purchases was unable to move the Japanese Yen; favors binary call options in the EURJPY currency pair