February 27th, 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 put options on rallies above 119.150
• Downside Potential: The downside potential for this binary put option is 225 pips to 116.900
• Upside Potential: The upside potential for this binary put option is 135 pips to 120.500
The USDJPY is trading back inside of its horizontal resistance level after a false breakdown occurred during its drift away from its most recent intra-day high of 120.479 which was reached on February 11th 2015. This move to the downside reached an intra-day low of 118.232 on February 17th 2015 which marked a higher low than its previous intra-day low of 116.872 recorded on February 3rd 2015. The USDJPY is now trading inside a triangle formation composed of its ascending support level and descending resistance level.
Price action is currently trading inside its horizontal resistance level which is located inside of its triangle formation. The USDJPY is expected to breakdown below its ascending support level and accelerate back down in order to challenge its intra-day low of 116.872. 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 119.150 for a risk/reward ratio of 1.0/1.67.
The USDJPY was exposed to a trading environment which featured low volatility during the move away from its intra-day high; volatility further decreased during its advance back inside of its horizontal resistance level. An increase in volatility is expected as the USDJPY is trapped inside of its triangle formation. Buyers may attempt to force a breakout above its descending resistance level which is not likely to extend above its current intra-day high. Sellers are favored to take the strength of its enforced resistance level in order to breakdown below its ascending support level.
The first support level awaits the USDJPY at its ascending support level around the 118.800 mark. This is a crucial support level and a breakdown below it will take the USDJPY to its intra-day low of 118.232 which was recorded on February 17th 2015. This marked the low of its drift to the downside. A breakdown below this level will take the USDJPY to its final support level which is located at its intra-day low of 116.872 recorded on February 3rd 2015. A double bottom formation is likely to prevent further downside.
The following economic data out of the United States is expected to impact the base currency, the US Dollar, of the USDJPY currency pair:
Chicago Purchasing Manager Index for the month of February:
• Expectations: A level of 58.0 is expected for the month of February
• Previous Report’s Data: A level of 59.4 was reported for the month of January
• Impact on the US Dollar: The anticipated slowdown in the Chicago PMI is likely 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 Japan already impacted the quote currency, the Japanese Yen, of the USDJPY currency pair:
Preliminary Industrial Production for the month of January:
• Expectations: A monthly increase of 2.7% was expected for January, an annualized contraction of 3.1%
• Previous Report’s Data: A monthly increase of 0.8% was reported in December, an annualized increase of 0.1%
• Released Data: A monthly increase of 4.0% was reported for January, an annualized contraction of 2.0%
• Impact on the Japanese Yen: The better than expected monthly increase in industrial production has applied upward pressure on the Japanese Yen; this favors binary put options in the USDJPY currency pair