May 20th, 2015 5:08 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 120.700
• Downside Potential: The downside potential for this binary put option is 220 pips to 118.500
• Upside Potential: The upside potential for this binary put option is 100 pips to 121.700
The USDJPY has spiked higher inside of its bullish price channel after a move to the downside took this currency pair from its intra-day high of 120.274 which was reached on May 12th 2015 to its intra-day low of 118.884 recorded on May 14th 2015. Price action remained contained inside of its bullish price channel, but the most recent intra-day high of 120.974 which was recorded today on May 20th 2015 marks a higher high as compared to its previous intra-day high. The ascending support level originated from its intra-day low of 118.493 reached on April 30th 2015 while the ascending resistance level can trace its origin to its intra-day high of 120.503 which was recorded on May 5th 2015.
Price action is currently trading near the top of its horizontal resistance level as well as its bullish price channel. The USDJPY is expected to reverse its advance and this currency pair offers an easy option trading set-up. Binary options traders can take advantage from the anticipated corrective phase with binary put options. Today’s binary options trading strategy suggests put options to be placed on rallies above 120.700 for a risk/reward ratio of 1.0/2.20.
Volatility contracted during the advance off of its ascending support level, but an increase in volatility is anticipated as the USDJPY is trading at a strong resistance level which is comprised of the top end of its horizontal resistance level and the ascending resistance level of its bullish price channel. Buyers may attempt to force a breakout in order to extend the recent advance, but the most profitable and easy option trading approach will take advantage of the increase in downward momentum as sellers are likely to force a price action reversal. This favors binary put options in the USDJPY currency pair.
The USDJPY will face its first support level at its intra-day high of 120.287 reached on May 1st 2015 from where a breakdown will lead this currency pair to its intra-day high of 119.925 which was recorded on May 15th 2015. The next support level awaits the USDJPY at its ascending support level around the 119.250 mark. A breakdown below this level will violate its bullish price channel and the final support level is located at its intra-day low of 118.493 which was reached on April 30th 2015 from where a double bottom may emerge.
The following economic data out of the United States is expected to impact the base currency, the US Dollar, of the USDJPY currency pair:
Release of the Federal Open Market Committee Minutes from the meeting between April 28th 2015 and April 29th 2015:
• Expectations: The FOMC minutes are likely to show a further delay in the expected interest rate increase by the US Federal Reserve due to an economic slowdown
• Impact on the US Dollar: The anticipated delay in monetary tightening 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 of Japan already impacted the quote currency, the Japanese Yen, of the USDJPY currency pair:
Gross Domestic Product for the first-quarter of 2015:
• Expectations: A quarterly increase of 0.4% was expected for the first-quarter of 2015, an annualized increase of 1.6%
• Previous Report’s Data: A quarterly increase of 0.3% was reported in the fourth-quarter of 2014, an annualized increase of 1.1%
• Released Data: A quarterly increase of 0.6% was reported for the first-quarter of 2015, an annualized increase of 2.4%
• Impact on the Japanese Yen: The better-than-expected GDP expansion has applied upward pressure on the Japanese Yen; this favors binary put options in the USDJPY currency pair