The first part of the training week came under the sign of call-option buyers. EUR/USD was trying to recover from previous losses, the Bulls had several attempts to lift the exchange rate above 1.1150. However, the pace of growth was limited as the bears used to step in several times. After a mixed performance, there was a bullish run towards the weekly high at 1.1174. That was exactly the resistance level that the bears were expecting to enter the market. Since Thursday afternoon, the currency pair was in a sharp downtrend, losing more than 100 pips (four-digit quotes).
Two technical indicators reflect the price action in the best way. Parabolic SAR was showing changes in the technical sentiment when its dots is to jump above or below the price. The average directional index was reflecting the momentum and it clearly indicated the reversal threshold. What's more, ADX pointed to a weak momentum in the first half of the training week. This is why the trading cycle of buying call options was not sustainable. The most lucrative trading cycle was noticed on Friday when EUR/USD bounced back up but failed to reverse the downtrend, while Parabolic SAR remained bearish. The ADX indicator delivered a strong signal to start buying put options and the currency pair chartered 18 consecutive candlesticks in the red.
currently, the downside pressure is likely to continue as all of the technical indicators point to bearish sentiment. On the other hand, there might be a similar approach to regain the bullish recovery in the first half of the upcoming trading week in the same way it was charted previously. Therefore, binary options traders should consider waiting for a clear signal before starting a new cycle of buying put options. The technical resistance level of 1.1115 could mark the beginning of another downside whipsaw.
The Swiss franc doesn't come in line with other major currencies in the binary options market. USD/CHF was the only currency pair will the strong demand for put options is the exchange rate continue declining. What's more, the bears were able to try out the lowest weekly close rate since and October 2018. The hourly chart below shows that the downtrend was sustainable and consistent. The only support level that the bears couldn't overcome was the mark of 0.9620. The price action reversed but it was mainly related to the strength of the greenback rather than the weakness of the Swiss franc.
Most of the technical analysts expected to continue declining in the week ahead as the long-term outlook is still negative. All technical indicators went to strong bearish momentum, although most of the oscillators are reaching extremely oversold levels. The intraday trading strategy should remain the same as binary options traders should continue buying put options right on bullish swings. The most powerful combination of technical indicators on the hourly chart includes Williams Alligator and Stochastic RSI because both indicators are quite sensitive to short-term reversals and whipsaws.
Binary options Traders should monitor signals coming from Williams alligator especially when its Lines cross each other, turning the sentiment to the eating mode. Stochastic RSI plays a secondary role confirming the signal coming from the primary tool. In this case, traders should watch both lines of the indicator crossing each other in overbought territory. The level of 0.9700 is a strong technical round-figure resistance so a failed test of it might signal the beginning of a new trading cycle to buy put options.
The British pound changed the direction of the trend several times this past week. After the week opened, GBP/USD was testing the bottom of the recent range with a support level at 1.29 to 60. To attempt to break through that support level failed and the pair reversed the price action. Continuous uptrend followed with several temporary retracements. However, the bullish run was limited and the weekly high at 1.3120. Put-option buyers stepped in at an attractive price, pushing the exchange rate lower. Friday's sell-off was mainly related to the strength of the greenback rather than the weakness of the pound. The pair finished the training week slightly above the round-figure support of 1.30 dollars per pound.
The intraday chart setup below shows a combination of three technical indicators that reflected the price action the best. First one is an exponential moving average with a period of 34 hours, showing the trend direction and support level during the upswing. Bollinger bands %B acted as a channel indicator, showing overbought and oversold levels, as well as pointing to strong resistance and support levels. Relative strength index was showing the momentum, confirming trading signals coming from other tools. As a result, several lucrative signals were provided. The technical analysis brought an attractive entry during the bullish reversal to start buying call options in the middle of the week. Another powerful signal came in when GBP/USD reached the highest level of the week and reversed the price action. That was a perfect time to stop buying call options and start buying put options.
The current sentiment is more neutral than bearish. Although downside swings are still possible, the overall medium-term picture looks on the outside. Therefore binary options Traders have to get ready to start buying call options in case of strong technical signals provided by intraday analysis. The horizontal static level at 1.29 should act as a strong support area, and potential downside whi[saws with the long shadows on hourly candlesticks could signal the beginning of the bullish reversal. At the same time, RSI and BB indicators have to be monitored especially in the scope of bounces from oversold zones.
Although Friday's price action was rather muted for the USD/JPY currency pair, the overall pace of growth was rather stable and consistent. The pair breached a strong resistance level at 110.00 for the first time since September 2019. Such a bullish breakout opens the road for the pair towards 112.00 yens per dollar, a level which reflects the fundamental situation in the Japanese economy. Besides, global equities gain strength much faster than the risk-appetite indicator. This is why it is fair to expect an acceleration of the uptrend for USD/JPY in the upcoming weeks.
The intraday technical picture is also positive. Ichimoku cloud trend indicator has a positive and growing surplus of the leading span, all of the lines are based in the right order to proceed with the uptrend. The hourly chart below shows several retracements of the price action that we are limited by the bottom of the Ichimoku Cloud. Those were perfect entries to restart buying call options, underlining the end of bearish corrections.
Two scenarios are possible for the week ahead. The first one suggests a stable but slow continuation of the uptrend, offering to buy call options with a larger expiration time of 4 hours. The second scenario is based on a sharp bearish correction to the support zone of 109.70/80 before reversing and going further north. In this case, the buy-dips trading strategy should be applied in accordance with intraday signals to start buying call options.