November 6th 2014 5:35am GMT, London UKToday’s Binary Options Trading Strategy:
Today’s Binary Options Trading Strategy:
• Currency Pair: USDCAD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary put options on rallies above 1.1400
• Downside Potential: The downside potential for this binary put option is 275 pips to 1.1125
• Upside Potential: The upside potential for this binary put option is 125 pips to 1.1525
The USDCAD has enjoyed a strong advance which came on the back of strength in the US Dollar which continues to enjoy upward momentum after the US Federal Reserve exited its monetary easing policy while traders have not reacted favorably to stronger than expected economic data out of Canada. The USDCAD has moved higher after reaching an intra-day low of 1.1122 on October 29th 2014 from where an accelerated move higher took this currency pair to its intra-day high of 1.1466 which was reached yesterday on November 5th 2014.
Price action has now drifted away from its most recent intra-day high which marked a false breakout above its horizontal resistance level. The drift lower took the USDCAD back inside its horizontal resistance level from where a breakdown is likely to emerge. Binary options traders can benefit from the anticipated breakdown with binary put options. Today’s binary options trading strategy suggests put options to be placed on rallies above 1.1400 for a risk/reward ratio of 1.0/2.20.
The breakdown should also result in a sharp increase in volatility as buyers and sellers will clash at a crucial level for the USDCAD. Buyers will defend the horizontal resistance level and attempt to turn it into support with a renewed breakout. Sellers are favored to take the weakness of the sharp advance coupled with the drift lower and back into its horizontal resistance level as a platform to force a breakdown which may develop into a full price action reversal.
The first support level awaits the USDCAD at its intra-day high of 1.1332 which it reached on October 31st 2014. A breakdown below this level will take this currency pair to its intra-day low of 1.1258 which was reached on October 31st 2014. This level has previously halted a move lower and pushed the USDCAD to its current intra-day high. The final support level is located at its intra-day low of 1.1122 which was reached on October 29th 2014 from where a double bottom formation is possible.
The following economic data out of the United States is expected to impact the base currency, the US Dollar, of the USDCAD currency pair:
Initial & Continuing Jobless Claims for the week ending November 1st/October 25th 2014:
• Expectations: Decrease of 2,000 initial jobless claims, decrease of 19,000 in continuing claims
• Previous Week’s Data: Initial jobless claims at 287,000, continuing claims at 2,384,000
• Impact on the US Dollar: The expected decrease in initial jobless claims as well as continuing claims may not be strong enough to resume the move higher in the US Dollar; this favors binary put options in the USDCAD currency pair
In addition the following economic report out of Canada is expected to impact the quote currency, the Canadian Dollar, of the USDCAD currency pair:
Building Permits for the month of September:
• Expectations: A monthly increase of 5.0% is expected for the month of September
• Previous Report’s Data: A monthly contraction of 27.3% was reported in August
• Impact on the Canadian Dollar: The expected increase in monthly building permits out of Canada is expected to lift the Canadian Dollar which favors binary put options in the USDCAD currency pair