USDCAD Binary Put Option – May 22nd 2015
GOption | May 22, 2015 04:49AM ET
Today’s Binary Options Trading Strategy:
• Currency Pair: USDCAD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary put options on rallies above 1.2180
• Downside Potential: The downside potential for this binary put option is 260 pips to 1.1920
• Upside Potential: The upside potential for this binary put option is 75 pips to 1.2255
The USDCAD has enjoyed a solid advance after reaching its intra-day low of 1.1919 on May 14th 2015. A combination of technical factors and fundamental economic releases has pushed this currency pair to its current intra-day high of 1.2256 which was recorded on May 20th 2015. Upward momentum started to recede as the USDCAD has drifted lower. The intra-day high which was reached as a result of the advance represents a higher high as compared to its previous intra-day high of 1.2205 reached on May 1st 2015. The recent increase in volatility may raise the following question: Are binary options profitable? Indeed they are with the proper analysis as outlined below.
Price action is currently trading inside of its horizontal resistance level from where upward pressure is fading. The USDCAD is expected to breakdown from current levels and enter a corrective phase. Binary options traders can profit from the anticipated breakdown with binary put options. Today’s binary options trading strategy suggests put options to be placed on rallies above 1.2180 for a risk/reward ratio of 1.0/3.47.
Volatility decreased during its initial advance until the USDCAD reached its horizontal resistance level, but an increase in volatility is anticipated as buyers and sellers are set to face-off inside of its horizontal resistance level. Buyers are likely to attempt a breakout in order to extend the current advance, but the upside potential remains limited and any potential breakout is expected to be reversed. Sellers are favored to pressure the USDCAD into a breakdown followed by a corrective phase which will lead this currency pair into its horizontal support level.
The USDCAD will face its first support level, after a successful breakdown below its horizontal resistance level, its intra-day high of 1.2067 recorded on May 15th 2015 from where this currency pair can resume its downtrend to its intra-day low of 1.1972 which was reached on May 13th 2015. This level represents the top end of its horizontal support level. The final support level is located at its intra-day low of 1.1919 recorded on May 14th 2015.
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The following economic data out of the United States is expected to impact the base currency, the US Dollar, of the USDCAD currency pair:
Annualized CPI & Core CPI for the month of April:
• Expectations: An annualized contraction of 0.2% in the CPI is expected for the month of April, an annualized increase of 1.7% in the core CPI
• Previous Report’s Data: An annualized contraction of 0.1% in the CPI was reported in the month of March, an annualized increase of 1.8% in the core CPI
• Impact on the US Dollar: The anticipated increase in annualized deflation as measured by the CPI is likely to pressure the US Dollar to the downside which favors binary put options in the USDCAD currency pair
In addition the following economic report out of Canada is expected to impact the quote currency, the Canadian Dollar, of the USDCAD currency pair:
Annualized CPI & Core CPI for the month of April:
• Expectations: An annualized increase of 1.0% in the CPI is expected for the month of April, an annualized increase of 2.3% in the core CPI
• Previous Report’s Data: An annualized increase of 1.2% in the CPI was reported in the month of March, an annualized increase of 2.4% in the core CPI
• Impact on the Canadian Dollar: The expected level in the annualized core CPI may suffice to apply upward pressure on the Canadian Dollar; this favors binary put options in the USDCAD currency pair
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