November 11th 2014 4:14am 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 115.250
• Downside Potential: The downside potential for this binary put option is 525 pips to 110.000
• Upside Potential: The upside potential for this binary put option is 275 pips to 118.000
The USDJPY has enjoyed continued upside pressures amid an extremely weak Japanese Yen which lend support for the accelerated move to the upside. Price action has not been faced with a solid price action reversal which has weakened the foundation of the move to the upside and made this currency pair vulnerable for a move to the downside. The USDJPY initiated the upside move after reaching an intra-day low of 105.193 on October 15th 2014 until it reached an intra-day high of 115.587 on November 7th 2014.
Price action has caught a downward drift away from its most recent intra-day high and currently trades inside its horizontal resistance level. The USDJPY may trade sideways until more fundamental data will provide the catalyst for a breakdown and move to the downside. Binary options traders can take advantage from the expected breakdown with binary put options. Today’s binary options trading strategy suggests put options to be placed on rallies above 115.250 for a risk/reward ratio of 1.0/1.91.
The move to the upside has been rather calm and orderly with low volatility as buyers were in firm control and sellers largely absent. This scenario is likely to revers and the USDJPY is expected to witness a sharp increase in volatility as sellers will take control of price action and use the horizontal resistance level coupled with the most recent drift lower as a solid platform to launch a breakout below the horizontal resistance level and extend a downward move until it reaches its ascending support level. Downward pressure is expected to be strong enough to force a breakdown below the ascending support level and continue its move to the downside.
The USDJPY will face its first support level at its intra-day low of 112.570 which was reached on November 3rd 2014 after a gap higher. A breakdown below this level will take this currency pair to its ascending support level around 111.800 from where a spike in volatility is expected to lead to a breakdown and take the USDJPY to its intra-day high of 108.351 which was reached on October 23rd 2014. The final support level is located at its intra-day low of 105.193 which it reached on October 15th 2014.
The following economic data out of the United States is expected to impact the base currency, the US Dollar, of the USDJPY currency pair:
Wholesale Inventories/Sales for the month of September:
• Expectations: An increase of 0.2% in wholesale inventories, a contraction of 0.1% in wholesale sales
• Previous Report’s Data: An increase of 0.7% in wholesale inventories was reported in August, a contraction of 0.7% in wholesale sales
• Impact on the US Dollar: The continued contraction expected in wholesale sales as well as the strong inventory buildup is likely to exercise pressure to the downside in the US Dollar which favors binary put options in the USDJPY currency pair
In addition the following economic report out Japan already impacted the quote currency, the Japanese Yen, of the USDJPY currency pair:
Current Account Surplus for the month of September:
• Expectations: A current account surplus of ¥537.7 billion was expected for the month of September
• Previous Month’s Data: A current account surplus of ¥287.1 billion was reported in August
• Released Data: A current account surplus of ¥963.0 billion was reported in September
• Impact on the Japanese Yen: The better than expected reading in the current account surplus out of Japan is expected to apply upward pressure on the Japanese Yen; this favors binary put options in the USDJPY currency pair