Today’s Binary Options Trading Strategy:
• Currency Pair: EUR/CAD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 1.4150
• Upside Potential: The upside potential for this binary call option is 390 pips to 1.4540
• Downside Potential: The downside potential for this binary call option is 150 pips to 1.4000
The EUR/CAD has corrected sharply and set a series of lower lows until a capitulation sell-off forced a temporary breakdown of the descending support line. This breakdown reached an intra-day low of 1.4034 on September 4th 2014 from where the EUR/CAD started to drift higher and record a series of higher lows which favors binary call options in the EUR/CAD currency pair. The sharp sell-off preceding the drift higher started after the EUR/CAD reached an intra-day high of 1.4626 on August 15th 2014.
Price action enjoyed limited upward momentum which has created an ascending support line from where the EUR/CAD is expected to resume its move higher. Binary options traders can benefit from the expected continuation of the uptrend with binary call options. Today’s binary options trading strategy suggests call options to be placed below 1.4150 for a risk/reward ratio of 1.0/2.60.
The ascending support level is expected to be tested which could result in a volatility spike as buyers may attempt to use the ascending support line to force the EUR/CAD upward while sellers could attempt to launch a successful breakdown. Should a breakdown occur it could create a double bottom formation which is a bullish chart pattern and further favors binary call options in the EUR/CAD currency pair.
The next resistance level for the EUR/CAD is located at 1.4253 which is an intra-day low reached on August 29th 2014 from where a previous drift higher unfolded prior to the sharp drop. A successful breakout will take the EUR/CAD to the 1.4361 level which is an intra-day high reached on September 3rd 2014 from where the EUR/CAD plunged. The next resistance level awaits the EUR/CAD at 1.4569 which is an intra-day reached on August 22nd 2014.
The following economic data out of the eurozone is expected to impact the base currency, the euro, of the EUR/CAD currency pair:
German Consumer Price Index for the month of August:
• Expectations: A monthly CPI reading of 0.0%, an annualized increase of 0.8% is expected for August
• Previous Report’s Data: The previous report showed monthly CPI at 0.0% and an annualized increase of 0.8%
• Impact on the Euro: The absence of deflation may benefit the Euro enough to resume its current drift higher; this favors binary call options in the EUR/CAD currency pair
In addition the following economic report out of Canada is expected to impact the quote currency, the Canadian Dollar, of the EUR/CAD currency pair:
New Housing Price Index for the month of July:
• Expectations: A monthly increase of 0.2%, an annualized increase of 1.6%
• Previous Month’s Data: A monthly increase of 0.2% in June, an annualized increase of 1.5%
• Impact on the Canadian Dollar: The expected annualized increase in the New Housing Price Index may not suffice to provide a lift for the Canadian Dollar which favors binary call options in the EUR/CAD currency pair