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By: Adam Stone
May 19th 2014 5:54am GMT, London UK

Binary options traders start a new week after a spell of volatility over the last 2 weeks. The US stock markets finished the week on a solid positive note as the S&P closed at 1877, just a few small points below the critical resistance at 1900 but that’s for later. The market looks a bit jittery this morning as Asian markets slipped and the EU session looks to be in peril. The fact is, markets in the current state of things are doing rather well considering the lack of a trend. Binary options traders will continue though to keep a very close eye on the ongoing in this US market which is the most attractive from a technical standpoint.

The S&P is looking to break above 1900 and we believe today is the day for this to occur. For the last few trading session the S&P has been unable to press forward and this is primarily due to the heavy resistance facing the index. From a fundamental analysis point of view, there’s really nothing there to stop the flight of the index, however this resistance is causing serious trouble. We are actually concerned that only reversal strategies will be favored by binary options traders today due to this.

Reversal strategies simply call for traders to take down options on each test of the 1900 level. This is likely to cause some trouble though for the uninitiated binary options traders. The issue is that the index isn’t really reaching the test levels with any inertia or directional bias. In other words, as the index heads slightly higher, it isn’t doing so with the needed levels of momentum to create a break or fall quickly down. This creates reversal trades with a much higher risk level seeing as how the test is met with heavy resistance however the market doesn’t let up. This causes the price action to hover around the test levels and thus leaves the trader exposed to a false signal time and time again.

As such, with such high risk levels, we recommend opting for break strategies only. If you are willing to take on more risk, we recommend at least waiting for the actual resistance itself at 1900 or just below, to be tested. Don’t take signals based on tests of 1898-1899. Wait for 1899.6-1899.75 before venturing into such a trade and this is purely out of worry that the signals garnered by normal reversal indicators will cause many false signals and lead to unnecessary loss.

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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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