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By: Adam Stone
June 25th 2014 9:26am GMT, London UK

Binary options traders might be a little perplexed this morning due to the paradoxical nature of the markets as exhibited yesterday across the globe. For starters, the strange behavior in the US indices was hard to avoid. The S&P dropped on what most analysts in the US chalked up to the escalating violence in Iraq as insurgents near Baghdad and look possibly beyond into the oil fields. Kuwait also believes that it will be a target if Baghdad falls and this should in fact greatly worry the markets. However, this is old news to be perfectly honest and the increased strife in the oil rich nation has been hovering like a dark cloud over the markets for nearly two weeks now with little to no reaction to the downside. So why now?

Why now indeed? The markets actually received a fair number of economic releases which were better than expected and the timing of this correction to the downside for the S&P, which fell 0.64% to 1949, was a great surprise. It’s not that we expect the market in such an uptrend, even with the current momentum, to be able to push higher relentlessly without a pullback. Such thoughts are delusional. Markets will recede on occasion and it’s a necessary part of momentum build up needed to carry the market higher to the next new record. Sometimes these corrections can carry on for days or even weeks. However, the S&P should not be considered a dangerous index at this point even if the correction carries on through the day ahead as well.

Expect the market to push on higher with the next resistance

With economic news yesterday showing further signs of strength for the US economy with the sales of new homes surging 18.6 percent to to an annual rate of 504,000 units in May, which is the highest since May 2008 and the biggest increase since January 1992, should help get the US indices back on track today.

For the day ahead, forex traders will do well to keep an eye on the EUR/USD which is currently stuck in a range and trading near 1.3615. The current rate is directly in the middle of a triangle based formation on the 30 minute charts and as seen below:

EURUSD 25-6-2014

The possibility of a move higher or lower are on equal level due to the nature of the current range. Binary options traders will be able to take any of the 4 scenarios as they play themselves out:

1. Reversal trade on a test of the resistance at 1.3625 (short term) or 1.3640 (long term)
2. Reversal trade on a test of the support at 1.3585 (short term) or 1.3565 (long term)
3. Break trade on a move higher above resistance at 1.3625 (short term) or 1.3640 (long term)
4. Break trade on a move higher above support at 1.3585 (short term) or 1.3565 (long term)

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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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