Today’s Binary Options Trading Strategy:
• Commodity: Oil
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary put options on rallies above 58.50
• Upside Potential: The downside potential for this binary put option is 840 pips to 50.10
• Downside Potential: The upside potential for this binary put option is 350 pips to 62.00
Oil has enjoyed a strong rally which developed after this commodity recorded its intra-day low of 50.06 on April 10th 2015. The move to the upside reached an intra-day high of 58.61 on April 20th 2015 which is located inside of its horizontal resistance level. A sideways trend emerged, but Oil managed to drift higher inside of a narrow bullish price channel. The ascending support level of this bullish price channel emerged from its intra-day high of 54.09 which was recorded on April 7th 2015 while the ascending resistance level can trace its origin to its intra-day high of 58.61. The bullish price channel guided this commodity to its most recent intra-day high of 59.85 which was reached on May 1st 2015.
Price action is currently trading inside of its horizontal resistance level after retreating from its intra-day high while a descending resistance level is exercising additional downward pressure on this commodity. Oil is expected to breakdown below its horizontal resistance level as well as below its ascending support level. Binary options traders can profit from the anticipated double breakdown with binary put options. Today’s binary options trading strategy suggests put options to be placed on rallies above 58.50 for a risk/reward ratio of 1.0/2.40.
This commodity advanced with a contraction in volatility which was further reduced as Oil enjoyed the calamity of its bullish price channel. The formation of a descending resistance level is likely to result in an increase in volatility as buyers and sellers are set to face off inside of its horizontal resistance level. Buyers may force a breakout above its descending resistance level which is unlikely to materialize. Sellers are anticipated to push this commodity into a breakdown below its bullish price channel. This favors binary put options in Oil.
Oil will face its first support level, after a successful breakdown below its horizontal resistance level as well as its bullish price channel, at its intra-day low of 56.51 which was reached on April 29th 2015. This level marked the last time the ascending support level pushed this commodity to the upside. A breakdown below this level will take Oil to its intra-day high of 54.09 which was recorded on April 7th 2015. The final support level is located at its intra-day low of 50.06 reached on April 10th 2015 from where a double bottom formation is possible.
The following economic data out Australia is expected to impact Oil:
Reserve Bank of Australia Interest Rate Announcement:
• Expectations: A 25 basis point cut in the interest rate to 2.00% is expected by the RBA
• Previous Report’s Data: The interest rate remained unchanged at 2.25%
• Impact on Oil: The expected cut in the Australian interest rate by 25 basis points to 2.00% is likely to pressure Oil to the downside which favors binary put options in this commodity
In addition the following economic report out of the United States is expected to impact Oil:
Trade Balance for the month of March:
• Expectations: A trade deficit of $41.7 billion is expected for the month of March
• Previous Report’s Data: A trade deficit of $35.4 billion was reported in the month of February
• Impact on Oil: The anticipated increase in the US trade deficit is likely to apply downward pressure on this commodity; this favors binary put options in Oil
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