The Swiss Franc kept declining versus the U.S. dollar this past week, reflecting the overall weakness of major European currencies. However, the pace of growth of the USD/CHF currency pair was not smooth as there was an attempt by the put-options buyers to push the exchange rate towards the bottom of the blue ascending channel on the four-hourly chart below. The test of the support trendline failed and the pair reversed the price action. Besides the graphical analysis pattern, several technical indicators also provided a strong signal to start buying call options last Wednesday. First, the exponential moving average with a period of 55 bars continued acting as the support curve. USD/CHF remains above it since the breakout on February 4, which is a bullish sign. Second, the fast and sensitive Relative Strength Index had a double bounce after coming off the overbought zone in the previous week. The oscillator keeps the ascending movement with more room to go north.
Call options should be in demand for the upcoming week as well. The exchange rate has got extremely close to a previous top (0.98289) on December 20 when USD/CHF was testing EMA55 from below. At the same time, here comes a parallel clone of the support trendline, which held the put-option buyers on February 12. If the bulls were able to breach that double resistance, then the road to the next target of 0.98654 will be open. The only concern is that a bearish bounce towards the round-figure support at 0.98000 is possible, so binary options traders should get ready to catch the pair around there and start buying call options in case of intraday trading signals from technical indicators.
The currency pair reflecting the overall market’s risk appetite did not follow the general direction of trading for binary options of U.S. stock indices. USD/JPY tested the highest rate since January 20 (110.13) this past week, but failed to hold gains and slid back to where it started the trading week. EMA55 also worked fine on the four-hourly chart, limiting further bearish price action. This could signal further pressure from call-option buyers in the week ahead. However, the bulls lack the momentum as the Average Directional Index has the mainline far below the threshold despite the positive surplus between +DI and -DI lines.
Therefore, two scenarios are possible for the upcoming week. The first one suggests a bearish bounce towards the upper band of the previous ascending channel highlighted by two parallel blue dashed trendlines with a possible consolidation at around 109.50. Such a bounce might play the role of a healthy retracement after failing to breach strong resistance at the top of the formation. Call-option buyers should consider using this opportunity to start buying call options with a 4-hours expiration time and shorter. Another scenario is sideways directionless price action in a tight range of 109.70/110.00 at the beginning of the upcoming week. In this case, traders could implement the breakthrough trading strategy, placing orders above or below the range, depending on the direction of the breakout. Nevertheless, the general long-term trend is headed north and binary options traders should take this into account.
Although USD/JPY finished the trading week flat, GBP/JPY finally started edging higher thanks to the surprisingly bullish performance of the British Pound across the board. GBP/JPY added more than 200 pips to the exchange rate and the uptrend is likely to continue in the week ahead.
The hourly chart setup below illustrates the price action of the previous week in the best way. The Ichimoku cloud trend indicator delivered several profitable signals to buy call options. The leading span performed the bullish crossover, both lines confirmed the signal by crossing the cloud from below, and the rate followed the general direction. Several tests of support levels marked by green arrows signalled moments when retracements came to the end and another wave of buying call options started. As far as the overall pattern remained bullish, and the pair closed the trading week near the local high, binary options traders should expect the further one-way movement towards the mid-term target of 145.50 yens per pound. The only recommendation for the upcoming week is to keep trading cycles short-lived as the cross-rate has a nature of range-bound trading with several peaks and bottoms in one day.
The single European currency weakened versus all of its major peers, while the EUR/GBP cross-rate was the most lucrative for binary options trading in terms of one-way price action. The pair lost more than 2% of the exchange rate, breaching several crucial technical support levels. On top of that, EUR/GBP closed the previous week at the lowest level since June 2016, promising further profits for put-options buyers from a long-term perspective.
The four-hourly chart below shows that the vast majority of bars were in the red, meaning a huge percentage of put-options in the money. The technical sentiment is extremely bearish, pointing to a downtrend continuation. Parabolic SAR is continuously placed above the price with the only exception of four last bars on the graph. If the first candle of the upcoming trading week was red again, Parabolic SAR dots would jump back above the price, signalling another round of put-option activity. Awesome Oscillator is in the negative territory, while three last bars reflect the rebound from the round-figure support of 0.8300 euros per pound. If the bears were able to breach the support from the third attempt, then the call-option buyers would be forced to remove their postponed orders towards the handle of 0.80 and the rate could enter another wave of the freefall. On the other hand, any bullish whipsaw should be considered as a brilliant opportunity to enter the market, using the sell-highs trading strategy.
WTI Crude Oil: Bullish
The price of oil retraced from the long-term bottom printed in the previous week. Binary options traders preferred buying call options for the black gold as the downtrend has gone too far recently. Most of the technical indicators were showing extremely oversold conditions and the retracement should have started sooner or later. As a result, WTI Crude closed the past week above the psychological mark of $52 per barrel, which could have a positive consequence for the bullish recovery.
From a technical analysis point of view, oil price charted a double-bottom pattern with higher lows on the hourly chart below. The reversal signal was confirmed by further bullish achievements as the price of oil crossed several horizontal resistance levels from below. The Double-Bolli setup shows an extremely bullish sentiment as WTI Crude remains near the upper band of the formation, breaching it several times. The range between the channel indicator was widening several times, pointing to high volatility. This means that the bears are far from giving up yet, and we could see further selling pressure in the week ahead. However, short-term bounces towards the BB middle line should be used as entry levels for call options buyers.