Binary options on EUR/USD stabilized somewhat in Asian’s session today. Following the past two days sell-off, as markets anticipated the US durable goods report later in the day. Even though, investors’ concerns over European fiscal problems kept their grip on the market, limiting upside so far.
The EU summit which will begin on Thursday, its main focus for the moment is the Euro, while, markets don’t expect the European leaders to take substantive action. As a result, the bloc’s currency remain under pressures, especially ,amid renewed rises in sovereign bond yields. Spanish and Italian debt auctions on Tuesday, showed that hree and six months bills ending with sharp jump in yield levels. Ongoing worries over Greece and fresh concerns over Cyprus are also fueling up the euro’s weakness.
However, binary bearish traders are likely to take a breather in the upcoming hours for two reasons. Firstly, the aggressive put options pushed the cross to fresh 3-week lows as well as testing a major support area and thereby mild corrections and some consolidation make sense. Secondly, the time is suitable for short-term bets ahead of the US key economic releases, which shift the focus again toward Fed’s stance over the weak recovery and by extension of QE speculations. Moreover, the market looked as though it has already priced the potential weak outputs from the EU summit, hence it should await the facts before deciding next.
Technically, the price continued to move sideways, on the lack of follow through selling so far also the absence of buying catalysts keep bulls sidelined for now. In the bigger picture, the 1.2400 handle is a crucial support line as represents a major monthly low, while, the June’s peak and double high pattern around 1.2740 serves as main resistance. Only a clearance, of this mark could signal rally extension off 1.2285 yearly low. Talking about the short-term, we don’t expect to cross the break below the mentioned strong supports directly. At least, it should attempt higher with a single upswing to fade the remaining bullish momentum. The daily RSI confirms this assumption as showing bearish bias but also remain well above 30 mark. As a consequence, binary traders might look to sell next rallies. The first important resistance factor will be around 1.2550, which represents 38.2% retracement of latest bear run between 1.2745-1.2440. Also, 100 and 55 4H-MA. Nonetheless, the most important resistance would be expected at 1.2590 area, which comprises the 200 MA both on 1H and 4H frames and 50% retracement. A break here would risk ending the recent pullback, hence, to indicate that the bullish resumption. This is a good reason for bears to defend by activating put options before losing control.
Disclaimer:
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.
