Article source: investing.com
Today’s Binary Options Trading Strategy:
• Currency Pair: AUD/USD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary put options on rallies above 0.8200
• Downside Potential: The downside potential for this binary put option is 170 pips to 0.8030
• Upside Potential: The upside potential for this binary put option is 50 pips to 0.8250
The AUD/USD has been trapped in a tight trading range defined by its intra-day high of 0.8254 which was reached on January 12th 2015 and by its intra-day low of 0.8032 which was reached on January 7th 2015. This currency pair is now trading inside its horizontal resistance level after a breakdown below it occurred driven by fundamental data before a reversal took place. Buying pressure has started to fade inside its horizontal resistance level which leaves the AUD/USD vulnerable to a move to the downside.
Price action is expected to trade inside its horizontal resistance level until enough downward pressure has been accumulated for a breakdown. The AUD/USD is anticipated to breakdown in order to challenge its horizontal support level from where a triple bottom may form. Binary options traders can benefit from the expected breakdown with binary put options. Today’s binary options trading strategy suggests put options to be placed on rallies above 0.8200 for a risk/reward ratio of 1.0/3.40.
Volatility has increased as the AUD/USD spiked to the upside and recorded its most recent intra-day high before collapsing. Volatility has decreased after this currency pair moved back inside its horizontal resistance level, but is expected to increase once again as buyers and sellers will face off at an important support/resistance area. Buyers are likely to try a breakout above its horizontal resistance level in order to test its most recent intra-day high. Sellers are favored to successfully breakdown and accelerate to the downside until it reaches its horizontal support level.
The AUD/USD will face its first support level at its intra-day low of 0.8106 which was reached on December 17th 2014 from where a breakdown will guide this currency pair to its next support level at its intra-day low of 0.8087 which was recorded on December 23rd 2014. An increase in volatility is expected at this level from where a breakdown can take the AU/DUSD to its intra-day low of 0.8068 which was reached yesterday on January 14th 2015. The final support level awaits the AUD/USD at its intra-day low of 0.8032 recorded on January 7th 2015.
The following economic data out of Australia already impacted the base currency, the Australian Dollar, of the AUD/USD currency pair:
Australian Employment Report for the month of December:
• Expectations: The addition of 5,000 jobs was expected for the month of December, an unemployment rate of 6.3%
• Previous Report’s Data: The addition of 45,000 jobs was reported in the month of November, an unemployment rate of 6.2%
• Released Data: The addition of 37,400 jobs was reported for the month of December, an unemployment rate of 6.1%
• Impact on the Australian dollar: The better than expected reading on job creation out of Australia has failed to provide meaningful upward pressure on the Australian Dollar which favors binary put options in the AUD/USD currency pair
In addition the following economic report out of the United States is expected to impact the quote currency, the US dollar, of the AUD/USD currency pair:
Empire Manufacturing Index for the month of January:
• Expectations: A monthly reading of 5.00 is expected in January
• Previous Report’s Data: A monthly reading of -3.58 was reported in November
• Impact on the US dollar: The anticipated increase in the Empire Manufacturing Index may suffice to pressure the US dollar to the upside; this favors binary put options in the AUD/USD currency pair