Today’s Binary Options Trading Strategy:
• Currency Pair: AUD/USD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 0.8680
• Upside Potential: The upside potential for this binary call option is 360 pips to 0.9140
• Downside Potential: The downside potential for this binary call option is 120 pips to 0.8560
The AUD/USD is currently trying to stabilize its severe downward move as price action has begun to move sideways in order to carve out a new horizontal support level. The steep sell-off also created a falling wedge formation which is a bullish chart pattern. The last leg of the move lower took the AUD/USD from an intra-day high of 0.9402 which it reached on September 5th 2014 to an intra-day low of 0.8666 which it reached today on October 1st 2014.
Price action is currently trading at its new horizontal support line and is attempting to launch a sustained breakout above its falling wedge formation which should lead the AUD/USD upward. Binary options traders can profit from the expected move upward with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 0.8680 for a risk/reward ratio of 1.0/3.20.
Volatility could increase sharply as sellers will attempt to hold on to negative momentum and keep the downtrend intact with a breakdown below the new horizontal support level in order to void the falling wedge formation. Buyers will use the double support level as a platform to reverse the current move lower with a breakout above the descending resistance line of the falling wedge formation. This is expected to accelerate the move higher which is expected to take the AUD/USD back into its next horizontal resistance level.
After a successful breakout above the falling wedge formation the next resistance level awaits the expected move higher for the AUD/USD at the 0.8885 level which is an intra-day high reached on September 25th 2014 and represents the last time this currency pair attempted to breakout above the descending resistance line. The next resistance level is located at the intra-day low of 0.8983 which was reached on September 15th 2014. A breakout above this level is expected to take the AUD/USD back into its next horizontal resistance line with an intra-day high of 0.9217 which was reached on September 11th 2014.
The following economic data out of Australia already impacted the the base currency, the Australian dollar, of the AUD/USD currency pair:
Retail sales for the month of August:
• Expectations: A monthly increase of 0.4% is expected for the month of August
• Previous Report’s Data: A monthly increase of 0.4% was reported for the month of July
• Released Data: A monthly increase of 0.1% was reported
• Impact on the Australian dollar: The disappointment in retail sales out of Australia led the Australian dollar into a double support level which favors binary call 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:
Institute for Supply Management Manufacturing Index for the month of September:
• Expectations: A reading of 58.5 is expected for the month of September
• Previous Report’s Data: A reading of 59.0 was reported for the month of August
• Impact on the US dollar: The slowdown in the US manufacturing sector is expected to exercise downward pressure on the US Dollar; this favors binary call options in the AUD/USD currency pair