Binary options on AUD/USD spiked sharply this Wednesday, propelled by strong gains in the binary commodity markets and early positive performance in Wall street which opened on a stronger note buoyed by upbeat results announced from blue-chip components Caterpillar Inc. and Boeing Co.
Today’s trade was seeing higher sentiment since the morning hours, supported by broad recovery in European binary markets following ECB governing council member Nowotny’s comments which suggested that the ESM, the permanent rescue fund, can get a banking license.
Coupled with the above, the Australian CPI reading showed the development of inflation pressures came in line the previous expectations which in turn weakened forecasts of further monetary easing by the RBA, which was also a plus for the Aussie sentiments.
The Chinese factor was bearish somewhat Wednesday after the IMF mentioned that the world’s second largest economy is facing significant downside risks due to ongoing debt crisis in Eurozone. China is the first trading partner with Australia and thereby binary traders of the Australian dollar typically take clues over the binary currency trends from Chinese economic data.
Furthermore, binary options analysts speculate that broad weakness in the British pound could benefit commodity currencies such as the Aussie, kiwi and the Loonie. The pound given the prolonged contraction in the UK’s economy which worsened according to latest growth data could lose its safe haven status, as the BOE should react by introducing additional easing measures. Any binary currency often weakens amid easing talks as this approach includes printing more banknotes or reducing interest rates and both actions decrease the value of the related currency. As a result, binary investor might prefer to purchase high-yielding currencies once the risk appetite improves instead of buying European majors.
Technically, looking at the 1H chart shows that the underlying price’s daily strength was paused temporarily around 1.0280. The binary cross used this mark as a resistance and retraced mildly down before collecting momentum and pushed strongly above this hurdle. The mentioned level represents the 200 MA on 1H and daily frame. Therefore, we might talk about a bullish breakout in near-term and the current setback could use the broken resistance as a new base in order halt the bearish developments. In the bigger picture, the overall bull swing off June’s bottom was also protected after the lower leg of ascending channel contained bearish attempt from last week’s peak at 1.0175. If the binary pair opted to dig higher we should see descend buying demand at 200 MA levels around 1.0280, preferably to stay above 1.0300 ground. In such a case, aggressive traders could start buying call options from current prices while conservative ones could await the clearance of recent high at 1.0335 before activating the call options. On the flip side, if the binary instrument breached the aforementioned supports and preferably to take out the double low at 1.0260, binary traders could anticipate deeper corrections and consequently, they could place the put options.
The information in the above analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.