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By: Adam Stone
December 20th 2013 6:47am GMT, London UK

Stock markets had a quiet trading day yesterday and binary options traders were hard pressed to find solid opportunities outside of the forex markets. This was despite the DOW JONES stock index heading even higher and creating yet another record high. The result of such a move would normally send an enormous amount of volume into the index for binary options traders. But alas, the Nasdaq and S&P indices actually fell. Although both were able to maintain support levels, it was a bad omen to both technical and fundamental traders and thus left most binary options traders looking elsewhere for the opportunities of the day.

That left really only the forex market open for such exploits. The USD/JPY was certainly the focal point for most binary traders. The currency pair burst through scores of resistances as it shot higher in a highly volatile and unpredictable manner. The fact is, most traders were completely unable to take advantage of this move despite it being in the direction of the general current trend, it still caught most by surprised. The move was of course part of the strengthening of the USD across all markets so on that level, it was perfectly clear. What wasn’t was the actual cause of the volatility and it was mostly due to the release of a very poor figure for the initial jobless claims in the US. However, shortly after an initial increase in the price of the EUR and JPY, for example, the USD just soared and took over.

USDJPY with binary options 20-12-2013

That is the reaction most traders couldn’t have expected given the miserable release. Furthermore, it calls into question the decision of the Fed to begin tapering the quantitative easing that will be trimmed to 75 billion from 85 billion as of January. While many expect that 15 month bond buyback program will have had some effect on the inflation in the US, it has not. However, now with the tapering a forgone conclusion, the market is reacting as though a reinstatement of the full amount of the program would in fact cause no inflation. It’s a rather convoluted way of thinking considering its very counter intuitive. It’s almost as though the market is willfully trying to coax the Fed into thinking “comon, leave that 10 billion in the market, it won’t cause you any harm.” Much like a black widow lures in his prey with a lulling or soothing action. The market is seemingly trying a similar tactic. Of course, it won’t work and might not even be a tactic of any kind but simply the price action in its most innocent form.

But for binary options traders, such moves and price action need to be analyzed so as to prevent potential loss in the future. For the day ahead, news will be on the light side. So keep focused on the charts.

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Adam Stone
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Adam Stone

As COO of GOptions, my first and foremost goal is to provide traders with the most up to date info from the markets. I have been trading the markets since 2004 and have been involved with stocks, binary options, and forex trading since then. I have had no formal market education and pride myself on a self taught approach to everything related to trading. I try to focus though on both the technical and fundamental aspects related to each trading day and bring forward the most important aspects of risk/reward in the market.
Adam Stone
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