› Weekly binary options technical forecast May 4 - 8

Weekly binary options technical forecast May 4 - 8

EUR/USD: Bullish


The past trading week started with a bullish continuation for EUR/USD on the back of a sustainable demand for call options across the board. However, the momentum was not strong enough to lift the exchange rate above the local resistance at around 1.0870, and EUR/USD slid below the EMA21 support curve, charting the weekly low at 1.0809. Another reversal of the price action occurred on Tuesday, and the pair had a bullish bias since then. Moreover, the European Central Bank announced additional supportive measures for the financial sector in the Eurozone, while the EU GDP contracted less than the US economy. That fundamental factor gave a boost for call-option buyers and EUR/USD rallied towards the crucial technical resistance at 1.0990 and even had several bullish whipsaws above 1.1020.

The technical sentiment remained bullish on the four-hourly chart below, the 21-bars exponential moving average kept rising. The MACD trend indicator points to a strong bullish momentum as the histogram is in the positive territory, while both lines are edging higher. The Relative Strength Index with a period of 14 bars had entered into the overbought zone and peaked on Friday, which could lead to a bearish rebound at the beginning of the upcoming week. Therefore, a buy-lows trading strategy is preferred with call options to buy on bearish whipsaws and intraday reversal signals. Pivot levels are as follows. Support: 1.0970 and 1.0950; Resistance: 1.1020, 1.1050 and 1.1100 in extension.

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GBP/USD: Caution


The overall formation is ascending for GBP/USD in the 4-hours timeframe. The Sterling had an intraday breakout of the crucial technical resistance towards the weekly peak at 1.2649, but failed to maintain the bullish momentum and slipped back to 1,2494 amid strong demand for put options at four-weeks highs. As a result, GBP/USD bounced back to the middle line of the Double-Bolli formation with a period of 21 days. Fast and sensitive Stochastic RSI signaled the bearish reversal by performing the crossover in the overbought zone on Thursday. However, the short-term cycle of buying put options came to the end as the pair is currently trading in the middle of the Bollinger Band.

The upcoming week might be full of false breakouts and whipsaws on both sides. The volatility is expected to jump for all Sterling pairs as the Bank of England scheduled the meeting on Thursday. After the disappointment in US and EU GDP figures in the first quarter, it would be hard to expect much better data from the UK, so the BoE might be dovish, which would not support Sterling from the fundamental side of things.

The technical preference if to wait for a bullish crossover of the Stochastic RSI and start buying call options after that. However, the trading cycle has to be quite short-lived as the likelihood of a sudden bearish reversal is still on the table. On the other hand, buying put options might become attractive if GBP/USD breached the support range at 1.2460/00, which could accelerate the downtrend. Nonetheless, binary options traders should keep an eye on fast oscillators and get ready to react to fast-changing market conditions immediately.

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USD/JPY: Bearish


The Japanese Yen gained strength versus the USD dollar amid worse-than-expected figures from the world’s third-largest economy. The Bank of Japan was not so pessimistic, publishing forecasts in line with IMF predictions. However, the USD/JPY was vulnerable to the bearish action on the bank of the demand for put-options for the greenback across the board, especially after weak US GDP figures.

From a technical analysis point of view, there is an essential resistance at 107.20 yens per dollar that used to act as the horizontal static support, and USD/JPY crossed it from above last week. Moreover, the pair continued the downtrend towards the long-term support at 106.40 but bounced back up to 106.91 on Friday. The mid-term outlook is bearish with more room to go south. The Ichimoku Cloud trend indicator has a bearish continuation pattern with the leading span expanding its negative surplus and both lines placed before the cloud. The recent bullish rebound was limited by two resistance curves, which leaves doubts about its sustainability. Buying put options with a long-term perspective is not a bad idea, considering the recent momentum, however, short-term upswings towards the weekly resistance at 107.20 and 107.50 are possible, so binary options traders might consider waiting for better prices before entering the market.

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AUD/USD: Bullish


The Australian dollar gained strength versus the US dollar last week, but Friday's action points to the fact that the bullish momentum is exhausted. As a result, the AUD/USD currency pair suffered from a sharp rebound and the exchange rate had breached the support trendline of the recent uptrend. On top of that, Williams Alligator switched to the bearish eating mode as all of its lines performed the bearish crossover and headed south. The Awesome Oscillator points to the shift of the momentum to the bearish zone as its histogram dropped below zero. The only concern for the put-options buyers is that the Williams %R oscillator is showing extreme levels in the oversold zone and it needs to reload. Before starting a new trading cycle of buying put options (or continuing the existing one), traders should consider waiting for a bullish rebound, find a reversal point and enter the market with an appropriate intraday signal from technical indicators.

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WTI Crude Oil: Bullish


The price of oil is in a clear uptrend starting from April 28. The hourly chart setup below shows a strong support trendline on the hourly timeframe. Binary options traders can use this line to start buying call options on bearish rebounds as there was no single hourly close below it last week. Besides, the Ichimoku Cloud trend indicator points to a strong bullish momentum, the leading span is positive and the surplus is widening, while both lines represent short-term support curves.

The Average Directional Index turned bullish as -DI and +DI lines crossed each other. The ADX mainline is still below the threshold, pointing to a weak bullish momentum though. Another concern for call-option buyers might be in the RSI bearish divergence as the oscillator charted three consecutive lower highs. On the other hand, that issue can be solved by a simple breakout of the mid-term resistance level at around $22.0 per barrel. If that happened, the uptrend would accelerate, and call options would attract more demand, so the overall preference is to continue the recovery for the week ahead.

oil

USD/CAD: Bullish


The Loonie is vulnerable to another week of losses versus the greenback. The USD/CAD currency pair had charted a bullish reversal on the hourly timeframe, according to the screenshot below. The Ichimoku leading span performed the bullish crossover, both lines crossed each other, and the exchange rate breached all of the resistance levels from below. On top of that, the indicator had completed the bullish reversal pattern to forecast the uptrend in the week ahead. There was a short-term bearish bounce on Friday, but it was limited by the Ichimoku Conversion line acting as the support curve.

The ADX and DI indicator turned bullish, the mainline jumped and signaled strong demand for USD/CAD call options. It is also important to note the bullish convergence on the fast Relative Strength Index as the sequence of higher lows allows technical analysts to talk about a high likelihood of the pair to keep rising in the week ahead.

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