November 26th 2014 5:20am GMT, London UKToday’s Binary Options Trading Strategy:• Currency Pair: USDJPY
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary put options on rallies above 118.000
• Downside Potential: The downside potential for this binary put option is 540 pips to 112.600
• Upside Potential: The upside potential for this binary put option is 200 pips to 120.000The USDJPY has resumed its sharp advance as the Japanese Yen continued to experience weakness due to economic reports out of Japan pointing towards a much slower economy as previously expected. The current phase of the accelerated move higher originated after the USDJPY reached an intra-day low of 105.193 on October 15th 2014. From this level the USDJPY moved sharply higher until it recorded an intra-day high of 118.975 on November 20th 2014. A drift lower emerged and a new horizontal resistance level was formed.
Price action is now trading inside its new horizontal resistance level which has merged with its descending resistance level. The USDJPY is expected to take this double resistance area and breakdown for a full price action reversal which will push this currency pair back inside its horizontal support level. Binary options traders can benefit from the anticipated move lower with binary put options. Today’s binary options trading strategy suggests put options to be placed on rallies above 118.000 for a risk/reward ratio of 1.0/2.70.
Volatility is likely to increase sharply at this merged resistance area as buyers are expected to use the current upward momentum, which was weakened significantly after the drift lower and away from its intra-day high emerged, and force a breakout above its double resistance level in order to extend the move higher. Sellers are favored to take the current resistance area and pressure the USDJPY to the downside and away from extreme overextended levels. The expected breakdown could accelerate sharply amid the lack of valid support levels.
The first support level after a successful breakdown awaits the USDJPY at its intra-day low of 115.452 which was reached on November 17th 2014. This level has given the USDJPY the final push higher until it reached its most recent intra-day high. A breakdown below this level will take this currency pair to its intra-day low of 113.854 which was reached on November 10th 2014. The next support level is located at its intra-day low of 112.570 which was reached on November 3rd 2014 from where a double bottom formation could halt any further breakdowns. The USDJPY may be able to swing higher from this area.
The following economic data out of the United States is expected to impact the base currency, the US Dollar, of the USDJPY currency pair:
Durable Goods Orders for the month of October:
• Expectations: A contraction of 0.6% is expected for the month of October
• Previous Report’s Data: A contraction of 1.1% was reported in September
• Impact on the US Dollar: The continued contraction in durable goods orders may suffice to push the US Dollar lower; this favors binary put options in the USDJPY currency pair
In addition the following economic report out Japan is expected to impact the quote currency, the Japanese Yen, of the USDJPY currency pair:
Small Business Confidence for the month of November:
• Expectations: A reading of 47.5 is expected for the month of November
• Previous Month’s Data: A reading of 47.4 was reported in October
• Impact on the Japanese Yen: The expected improvement in small business confidence out of Japan is likely to apply upward pressure on the Japanese Yen which favors binary put options in the USDJPY currency pair