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USDJPY – AUGUST 26TH 2014

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By: Adam Stone
August 26th 2014 5:38am GMT, London UK
 

Today’s Binary Options Trading Strategy:

• Currency Pair: USDJPY
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary put options on rallies above 103.850
• Downside Potential: The downside potential for this binary put option is 160 pips to 102.150
• Upside Potential: The upside potential for this binary put option is 65 pips to 104.500

The USDJPY has rallied sharply over the past sixteen trading days. The sharp rally formed a rising wedge formation which is a bearish trading signal. The move upward took this currency pair from an intra-day low of 101.511 reached on August 8th 2014 to an intra-day high of 104.152 reached on August 24th 2014. It appears as if this currency pair has exhausted its move higher and is vulnerable for a reversal.

USDJPY

Price action has formed a rising wedge formation which is a bearish chart pattern and suggests that the USDJPY may initiate a trend reversal. Binary options traders can take advantage from the expected reversal with a binary put option. Today’s binary options trading strategy suggests put options to be placed below 103.85 for a risk/reward ratio of 1.0/2.46.
The sharp deterioration in the Japanese Yen can be attributed to a potential new round of economic stimulus by the Bank of Japan. Traders should expect a few attempts to record a higher high with an increase in volatility as buyers may test how strong the bearish chart pattern is. False breakouts may occur which will temporarily violate the rising wedge formation which should be taken as entry opportunities into binary put options.

The anticipated move lower will face its first major support level at 102.738 which is an intra-day high reached on July 30th 2014 and represents the end of a previous rally which resulted in the correction down to the intra-day low of 101.511 from where the sharp move higher emerged. A breakdown below this level will take the USDJPY to the 102.138 level which marks the next horizontal support level for this currency pair.

The following economic data out of the US is expected to impact the base currency, the US Dollar, of the USDJPY currency pair:

Durable Goods Orders for the month of July:

• Expectations: Durable goods orders increase of 5.1%, durable goods orders excluding transportation increase of 0.4%
• Previous Month’s Data: : Durable goods orders increase of 1.7% in June, durable goods orders excluding transportation increase of 1.9%
• Impact on US Dollar: The weak durable goods orders excluding transportation reading is expected to pressure the US Dollar to the downside which favors binary put options in the USDJPY currency pair

In addition the following economic report out of Japan already impacted the quote currency, the Japanese Yen, of the USDJPY currency pair:

Corporate Service Prices for the month of July:

• Expectations: Corporate service price increase of 3.7%
• Previous Month’s Data: Corporate service prices rose 3.7% in June
• Released Data: Corporate service price increase of 3.7%
• Impact on Japanese Yen: The figure came in as expected and did not impact the Japanese Yen which further favors binary put options in the USDJPY currency pair

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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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