November 13th 2014 4:13am GMT, London UK
Today’s Binary Options Trading Strategy:
• Currency Pair: NZDUSD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary put options on rallies above 0.7870
• Downside Potential: The downside potential for this binary put option is 210 pips to 0.7660
• Upside Potential: The upside potential for this binary put option is 140 pips to 0.8010
The NZDUSD has managed to launch a move to the upside after reaching an intra-day low of 0.7660 on November 7th 2014. Preceding the current rally was a sharp move to the downside after this currency pair reached an intra-day high of 0.8013 on October 21st 2014. The current move to the upside did record a higher high above its previous intra-day high of 0.7822 which it reached on November 10th 2014 from where it drifted to a higher low of 0.7712 which was reached on November 11th 2014. The NZDUSD may extend its move until it runs into its descending resistance line around 0.7900.
Price action is now approaching its descending resistance level which is likely to exercise downward pressure on this currency pair. The NZDUSD is expected to lose upward momentum and reverse back down into its horizontal support level. Binary options traders can profit from the anticipated breakdown with binary put options. Today’s binary options trading strategy suggests put options to be placed on rallies above 0.7870 for a risk/reward ratio of 1.0/1.50.
Volatility is expected to spike at the descending resistance level as buyers, expected to use the current upward momentum as a catalyst for a breakout in order to extend the move higher and challenge its most recent intra-day high, and sellers, who are anticipated to use the descending resistance level as a platform to launch a price action reversal, will clash at a key level for the NZDUSD. Given the weakness in economic factors impacting the New Zealand economy and the overextended levels of the NZDUSD sellers are favored to take control of price action near the 0.7900 level.
The first support level awaits the NZDUSD at its intra-day high of 0.7822 which was reached on November 10th 2014. This level has previously reversed an upward move and forced this currency pair lower. A successful breakdown below this level will take the NZDUSD to its intra-day low of 0.7712 which was reached on November 11th 2014 and stopped the downward drift initiated by the preceding intra-day high. The final support level is located at its intra-day low of 0.7660 which was reached on November 7th 2014 from where a double bottom formation is possible.
The following economic data out of New Zealand already impacted the base currency, the New Zealand Dollar, of the NZDUSD currency pair:
Business Performance NZ Manufacturing Index for the month of October:
• Expectations: A reading of 58.0 is expected for the month of October
• Previous Report’s Data: A reading of 58.5 was reported in September
• Reported Data: A reading of 59.3 was reported for the month of October
• Impact on the New Zealand Dollar: The better than expected reading out of the New Zealand manufacturing sector has failed to lift the New Zealand Dollar; this favors binary put options in the NZDUSD currency pair
In addition the following economic report out of the United States is expected to impact the quote currency, the US Dollar, of the NZDUSD currency pair:
Initial Jobless Claims for the week ending November 8th 2014 & Continuing Claims for the week ending November 1st:
• Expectations: Initial jobless claims at 280,000, continuing claims at 2,349,000
• Previous Report’s Data: Initial jobless claims at 278,000, continuing claims at 2,348,000
• Impact on the US Dollar: The anticipated stable reading on initial jobless claims as well as continuing claims could push the US Dollar higher which favors binary put options in the NZDUSD currency pair