Check out this week’s technical trading analysis which you can use for your binary option and/or forex trading needs. This week I would like to start by taking a look at the big picture. There are two main assets that can shed light on the market situation; they are the S&P index and the EURUSD.
The best and most reliable time frame to get a better understanding of the market is the monthly chart. Let’s jump in our Delorean and travel back to 2008….
When you combine the MACD indicator with a trend line it is a strong signal as shown on the chart below. The MACD indicator is one of the most popular indicators. It gives signals with great success rate.
S&P Monthly chart 2008
A quick review of the MACD indicator:
MACD stands for Moving Average Convergence Divergence. It is made up of the following:
- Fast EMA for 12 days (EMA – Exponential Moving Average) – Blue line
- Slow EMA for 26 days – Red line
- Signal moving average for 9 days – Green histogram
When the Fast EMA (blue line) and Slow EMA (red line) cross, it signals potential change in the price trend of the asset. The more we zoom out, the more reliable it is. It happened before in 2008. Along with the break out of the trendline, we experience one of the sharpest decline in S&P history.
Looking at 2016, we see the blue and red lines crossing, however, without a trend line breakout.
From a fundamental perspective, the monetization policy of US and European central banks is to keep interest rates at the minimum level possible such as zero or even negative interest rates. The last update was for the European Union, which decided to reduce rate and to have a monetization expansion. It didn’t affect the EUR currency as anticipated. It appears that the central banks lost their ammunition to fight the situation created out of the 2008 crash.
S&P Monthly Chart 2016
It’s not a matter of IF the markets will experience another major decline, it’s a matter of WHEN it will happen. As a trader, you should take this into consideration.
As mentioned in my previous analysis, one of the key events is the British referendum to stay in or leave the EU – it is set to happen on June 23rd.
That’s for the long run. Now, let’s take a look at next week’s opportunities to make some money.
The weekly chart shows a neutral trend defined by its boundaries. As long as the currency pair doesn’t break out of the resistance line, you should try to go for PUT options for the longer periods. As I always say you only need a couple of good trades to make a profit; you don’t have to place tons of binary option trades.
EURUSD Weekly Chart
The trigger can be a break out from the daily trend line for put options, in this case I would go with
EURUSD Daily Chart
One rule I learned through the years is that if everybody have the same opinion of an asset you need to double check that though. A perfect example is crude oil. The majority of analysts support an estimation that oil has already experienced its low price and from now on it’s going to be an uptrend.
I would wait for a trigger to go short with some PUT options. The trigger will be a breakout from the 4 hour chart so keep an eye on oil.
Crude Oil 4 Hour Chart:
As for the other currencies and assets, they already made their breakout move and for now I would try to use strategies for short timeframes only, for instance the Bollinger bands strategy. The AUDUSD might reach a reverse trigger for CALL options, just follow the strategy.
AUDUSD Daily Chart
As for the short timeframe, when Bollinger bands head towards each other it shows a narrowing down of the price range, you may use it for a boundary option.
AUDUSD Hourly Chart
That’s it for this week! Have a great success with your trading, if you like the analysis please share it.