A Brief Look at Binary USD/JPY

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A Brief Look at Binary USD/JPY

Post  Josephfx on Sun Sep 30, 2012 10:47 am

This week the USD/JPY declined in every single day as investors grew increasingly pessimistic about the strength of the global economy and the effectiveness of the bond-buying programs, announced by central banks across the world. The move to safer assets came also as a result of the profit-taking of the large market participants. The currency pair started the week around 78.11 and after several attempts at breaking below the key 78.00 level it moved lower to finish the Monday session close to its bottom of 77.77. Even the worse-than-expected CSPI figures for the Japanese economy did not scare away the market participants, who were running head over heels to buy yens. The prices of services purchased by corporations dropped by 0.3% in August, just as much as they did in the previous month, adding pressure on Bank of Japan. On Tuesday, both traders of binary put options and of binary call options were able to profit from the movements in the USD/JPY. In the early hours of the session the currency pair dropped as low as 77.62 before bouncing back up and trading at 77.92 around noon. Towards the end of the session traders of binary put options had another money-making opportunity as the USD/JPY steadily moved downwards to end the session at 77.74. On Wednesday, the bears were gaining momentum in the morning, sending the currency pair to rates of 77.54. But later the bulls took the initiative and propelled the USD/JPY higher to the 25-period moving average, where they encountered with some resistance, which proved to be too strong for them and they scattered. For the rest of the session traders of binary put options were the ones to cash in some winners as the bears moved to retest the support at the 77.60 level. The selling was triggered by the worse-than-expected data coming from all over the world. The new home sales for the U.S. economy disappointed, while the German 10-year bonds were sold at a relatively high yield. Today the USD/JPY is moving in a tight range as market participants are preparing for the battery of economic data that is scheduled to be released later in the session. We have household spending data, CPI data, industrial production data and retail sales data hitting the wires in a time span of less than 30 minutes. Since most traders will probably wait for these figures to be announced, the volatility in the yen is likely to remain somewhat subdued throughout the day. That makes the binary range in options the perfect instrument to take advantage of this limited investor interest.

Technically speaking support in the USD/JPY is provided by the 77.60 level, while resistance is standing around the 25-period moving average at 77.85. Oscillators are moving close to the lower bands of their respective ranges, indicating that we might see a short-term corrective movement to the downward trend we are in. The relative strength index is standing at 36, while the stochastic is at 35. The MACD is also issuing buy signals after moving very close to the lows we touched in mid-September.

Source: binaryoption


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