February 2nd, 2015 5:04am GMT, London UK Today’s Binary Options Trading Strategy:• Currency Pair: USDJPY
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 117.400
• Upside Potential: The upside potential for this binary call option is 245 pips to 119.850
• Downside Potential: The downside potential for this binary call option is 155 pips to 115.850
The USDJPY has entered a prolonged sideways trend inside its horizontal support level. A false breakdown occurred which led to an intra-day low of 115.851 on January 16th 2015 from where a sharp reversal took place before this currency pair started to trend lower guided down by its descending resistance level. A second false breakdown resulted with an intra-day low of 116.872 which was reached on January 3rd 2015. This allowed for the formation of an ascending support level.
Price action is trading at this ascending support level which has intersected its horizontal support level. The USDJPY is expected to continue its drift higher until it can breakout above its descending resistance level for more upside potential. Binary options traders can profit from the likely breakout with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 117.400 for a risk/reward ratio of 1.0/1.58.
Volatility has been deflated during the current sideways trend, but is expected to increase sharply as the USDJPY is trapped inside a triangle formation which will pressure this currency pair to either breakdown below its ascending support level or breakout above its descending resistance level. Sellers may attempt another false breakdown which is not likely to materialize far below its ascending support level. Buyers are favored to take the enforced support level in order to breakout and challenge its most recent intra-day high.
The USDJPY will face its first resistance level, after it successfully broke out above its descending resistance level, at its intra-day high of 118.864 which was reached on January 20th 2015. This level marks the high reached during a previous move higher. Given the prolonged sideways trend this is the only resistance level which stands between the USDJPY and its final resistance level which is located at its intra-day high of 119.877 which was reached on January 9th 2015 and from where the descending resistance level originates.
The following economic data out of the United States is expected to impact the base currency, the US Dollar, of the USDJPY currency pair:
Initial Jobless Claims & Continuing Claims for the week of January 31st 2015 and January 24th 2015:
• Expectations: Initial jobless claims at 290,000 for the week ending January 31st 2015, continuing claims at 2,400,000 for the week ending January 24th 2015
• Previous Report’s Data: Initial jobless claims were reported at 265,000 for the week ending January 24th 2015, continuing claims at 2,385,000 for the week ending January 17th 2015
• Impact on the US Dollar: The expected increase in both initial jobless claims as well as continuing claims is likely to be overshadowed by economic data out of Japan which favors binary call 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:
Japanese Buying Foreign Bonds & Stocks for the week of January 30th 2015:
• Expectations: Bond purchases worth ¥578.9 billion for the week ending January 30th 2015, stock purchases worth ¥411.7 billion
• Previous Report’s Data: Bond purchases worth ¥44.2 billion for the week ending January 23rd 2015, stock purchases worth ¥382.1 billion
• Released Data: Bond purchases worth ¥675.2 billion for the week ending January 30th 2015, stock purchases worth ¥457.9 billion
• Impact on the Japanese Yen: The Japanese Yen was pressured to the downside after the release of foreign bond and equity transactions by Japanese traders and investors; this favors binary call options in the USDJPY currency pair