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By: Adam Stone
March 4th 2014 7:14am GMT, London UK
Under the threat of Chinese economic weakness, the US market retreated yesterday. We explained yesterday in our daily binary options analysis that the Chinese weakness as exhibited in the release of manufacturing results was a the main culprit in the slide in stock prices and as such we anticipated the follow-up weakness in the US markets. You can read yesterday’s column here: http://www.goptions.com/china-rattles-us/. But yesterday is over and done with. The fact that the US stocks fell is no reason to believe stocks will again fall today. Although the trend is downward, there is no current worry about fall-out from yesterday’s moves.

This is not to state that we are suddenly optimistic about the overall situation. We are actually rather anxious about the ability of the US and European economies of recovering at a desired pace. But the Asian markets headed higher this morning, testament of resilience. The NIKKEI is closing up its session now after rising 0.47% to 14721 and the Hang Seng close dup 0.63% to 22642. The rise in stock prices just a day after a sharp drop on the heels of poor economic indicators from China is a good omen for the coming opening of the EU and US session.

Looking forward, the forex market today will again be in the forefront and binary options traders are likely to refocus their energies on the moves of the EUR/USD which has been anything but stable of late. After spiking higher on Friday above the 1.3823 level, binary options traders watched as the forex pair retreated slightly to the mid 1.37s and now the future is a bit murky, to say the least. From the perspective of chart analysis from the intra-day level, things are very difficult to read. The move back into the range between a 1.3823 and the support at 1.3710. If the pair fails to test either of these boundaries in the coming 12 hours, there is concern from a technical analysis perspective, that the pair will get stuck in this range for at least 3-4 days. What we want to see is at least a test of either level which will present the opportunity for binary options traders to take on reversal strategies. This can be a very profitable means of being an opportunistic trader today seeing as how tests of this kind, on a day where the range seems very well entrenched, generally rinse and repeat for hours. It means that if we see a weak test of either of the levels, the likelihood of a repeated test after a retreat are much higher today. If of course a break is recorded, then traders can go bigger. But so long as it’s just reversal strategies, stick to small and quicker trades.

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Adam Stone
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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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