Binary S&P500 starts hesitating around current levels. After the tremendous run in the last week influenced by Federal Reserve representatives stating that all needed measures will be taken to stabilize the struggling economy, the binary index is about to lose steam. The increase in the underlying instrument could be outpacing the development of the economy which is a bearish signal for the binary traders. The binary market is eying the decisions about the rate changes from the FED and ECB. There is little room for significant surprises. It seems as though another 25bp cut by ECB is already priced. The binary traders doubt that any good steps be possible to assuage the global economy. It could take the shape of severe sell-offs.
Binary options on S&P500 are flirting with 1390 points. It is the threshold between the end of the uptrend run and the downside rush. It has been tested 4 times in the last 4 days without being broken. Some binary option traders could tell that this is sufficient to start buying binary put options. However, another volatile move could be triggered to retest the important mark before the downside pressure increases. It is of great importance for the intraday traders because this fact could lead to significant losses.
Timing is one of the most important elements of trading business. Should the binary market participant feel that it could take more time before achieving his/her goals, it would be better not to take intraday positions but rather perform swing trading. It is reasonable to pay for the time value instead of losing all the stake.
Binary options are trading in an upside channel for now. The slope of the pattern is against the overall downside trend. The slope is not so steep to the upside. Typically, it reveals a huge downside potential targeting 1350-1340 points range.
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.