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NEW WEEK. NEW TREND?

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By: Adam Stone
May 5th 2014 5:40am GMT, London UK
 
In the wake of Friday’s NFP report, markets are rather jittery in the early session today. Asian markets are heading lower and looking fragile as we head into a new week of trading. On Friday, we watched the release Non Farm Payrolls report, which to binary options traders is the biggest news event of the month, publish a massively positive result of 288 thousand new employees in the US economy. This is almost 100 thousand more than last month and just about the same distance from what economists and analysts expected for Aprils’s NFP figures.

The NFP, however, was unable to create any significant uplift to the stock markets. Strangely enough, in a week where the equity markets seemed starved for some positive news, it’s hard to imagine what more the market could really ask for. This result, which is a level of employment expected in an economy only in the best of times, and not during a recovery phase, should have sent the equity markets into frenzy and we are incredibly surprised that the markets were unable to look past some very minor negativity and straight into the light of this awesome news.

Now with the Asian markets closing up in the red, many would anticipate similar results in the US. The fact is, we do not. It is actually more likely that the US markets will head higher as a response to the dismal showing in equities this past Friday. Forex markets weren’t much phased by news either, and surprisingly enough, if looked upon in the right time frame, the charts didn’t even miss a beat.

The EUR/USD for example, dropped about 60 pips initially when the release hit the wires, but the move down to 1.3815 was very short lived. Immediately, the forex pair headed back higher to 1.3870 and just trended higher from there. In fact, this up trend, which began early in the trading day this past Friday, just kept on keeping on since then. Today, despite some minor dips, the market seems to have stabilized and forex traders, as well as binary options traders on forex pairs, will likely need to wait for the next break.

At present, the level 1.3882 is the resistance of choice. It will act to strongly suppress any move higher today and should be considered a strong resistance. This may lead many forex traders to utilize it as a short term pivot for reversal strategies. Binary options traders can use the same strategy, implementing it properly by maintaining relatively small positions with shorter expiries.

Make sure to stick to this plan if you are intent on using reversal strategies as taking larger positions can lead to a large intake of volume, which is not always the best course of action on the first day of the trading week. Better to always start slow and steady when it comes to these sorts of things.

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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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