NZD/USD Binary Call Option: January 21, 2015

Today’s Binary Options Trading Strategy:
• Currency Pair: NZD/USD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 0.7675
• Upside Potential: The upside potential for this binary call option is 210 pips to 0.7885
• Downside Potential: The downside potential for this binary call option is 75 pips to 0.7600

The NZD/USD has retreated from its most recent intra-day high of 0.7889 which it reached on January 15th 2015. The spike higher was the result of the fallout from the surprise move by the Swiss National Bank which rattled financial markets. The move to the upside set a higher high as compared to its previous intra-day high of 0.7865 which was reached on January 12th 2015. This currency pair has now retreated back inside its horizontal support level from where a double bottom chart pattern has formed.

NZD/USD

Price action is currently trading inside its horizontal support level and a sideways trend is likely to emerge in order to deflate further downward momentum. The NZD/USD is expected to stabilize and drift higher before accelerating back to its horizontal resistance level. Binary options traders can benefit from the anticipated move to the upside with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 0.7675 for a risk/reward ratio of 1.0/2.80.

Volatility has decreased as the NZD/USD has entered a corrective phase away from its most recent intra-day high. Volatility is expected to increase as this currency pair is trading inside its horizontal support level. Sellers are likely to attempt a breakdown below this level in order to extend the current move to the downside. Buyers are expected to take the validity of its horizontal support level in order to reverse its corrective move. This favors binary call options in the NZD/USD currency pair.

The NZD/USD will face its first resistance level at its intra-day high of 0.7755 which was reached on December 23rd 2014. A breakout above this level will take the NZD/USD to its intra-day high of 0.7807 which was recorded on January 19th 2015. This level marked the high of a drift to the upside before resuming its corrective move. The final resistance level is located at its intra-day high of 0.7889 which was reached on December 15th 2015.

The following economic data out of New Zealand already impacted the base currency, the New Zealand dollar, of the NZD/USD currency pair:

Consumer Price Index for the fourth-quarter of 2014:
• Expectations: A quarterly reading of 0.0% was expected for the fourth-quarter, an annualized increase of 0.9%
• Previous Report’s Data: A quarterly increase of 0.3% was reported in the third-quarter, an annualized increase of 1.0%
• Released Data: A quarterly contraction of 0.2% was reported for the fourth-quarter, an annualized increase of 0.8%
• Impact on the New Zealand dollar: The lower than expected reading on fourth-quarter inflation has failed to apply downward pressure on the New Zealand dollar; this favors binary call options in the NZD/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 NZD/USD currency pair:

Building Permits & Housing Starts for the month of December:
• Expectations: A monthly increase of 0.8% in building permits is expected for December, an increase of 1.2% in housing starts
• Previous Report’s Data: A monthly contraction of 3.7% in building permits was reported in November, a contraction of 1.6% in housing starts
• Impact on the US dollar: The expected increase in building permits and housing starts is unlikely to suffice to pressure the US dollar to the upside which favors binary call options in the NZD/USD currency pair