Tip from the Geek – Top 5 Binary Options Trading Tips 01/20-27/2014
Holiday Shortened Week
Trading in the U.S. markets is shortened by one day this week due to the Martin Luther King Jr. Holiday. This does not it any less important for trading. This week will be dominated by earnings announcements. The economic calendar is fairly light but there are hundreds, if not thousands, of earnings reports scheduled to be released. Last week the banking sector delivered a series of reports that revealed a mixed picture of growth with areas of weakness but a generally positive view of 2014. Other reports, delivered throughout last week, did much of the same.
While last weeks reports were dominated by the banking sector, this week will be more of a broader picture of the economy and earnings growth. Expect reports from consumer products makers like Johnson & Johnson and Proctor & Gamble, along with othes like Coach, Starbucks and even Abbot Labs and Netflix. There will also be reports from the tech sector from Advanced Micro Devices and Sandisk. There will also be some more banks, but primarily regional operators like Fifth/Third and US Bancorp. Be on the the look out for earnings growth, future guidance and from the banks, increased deposits and mortgage originations.
The ECB meets this week but next week things may come to a head. The ECB is not likely to increase stimulus and there is no press conference scheduled for this meeting. Next week we will be about halfway through earnings season, enough time to have a good grasp on that situation, and just in time for the FOMC meeting. On top of that there is also a BOJ meeting. Both banks have the power to move their respective markets. The FOMC is likely going to taper again, another $10 billion is my estimate. The BOJ will have statements supporting their policy moves and possible an indication of if or when more may be needed. The dollar, euro, yen and all the world indices could be in for big moves.
1. U.S. Economy Stabilising
S&P 500
Call/Put = Call
Entry = Below 1840
Expiration = One Month
The signs are clear that the U.S. economy, and the world economy in general, is stabilising. Recent data, though mixed, has remained in line with the longer term trends of growth and imporovement. Earnings this season are a little concerning at this point. They are not quite as robust as one would like, and the forward guidance is not universally positive. This could cause the market to correct some but I think not. The SPX has been trending sideways ever since the start of the Christmas holidays and has made a nice consolidation and there is no indication of bearish activity at this time.
The SPX is trapped between support at 1820 and resistance at 1840. This range marks the pre-Holiday closing level and the high set just before the end of the year. The fact that the index has not fallen below this level is promising, but the fact that it has not moved above it is equally troubling. There is a chance that the index could correct but with the long term trend still being up I would view that as a buying opportunity. At this time support is aided by the short term moving average with indicators that are beginning to echo support. Because there could be some short term volatility this week I am trading monthly positions on this index. The FOMC meeting will be a catalyst, to the upside in my opinion so I am tradin calls with a target entry below 1840.
2. ECB Meeting On The Schedule
DAX
Call/Put = Call
Entry = Below 9700
Expiration = One Month
I am trading a similar position on the DAX this week as on the SPX. The ECB meeting, earnings season and data could provide some volatility but the FOMC meeting should be the catalyst for longer term movment. The DAX is trading at high levels relative to the trend but this OK because it is also being supported by bullish indications. I am trading calls on the DAX with a target entry belo 9700 and one month until expiration.
3. USD/JPY Set To Move
USD/JPY
Call/Put = Call
Entry = Below 104.25
Expiration = One Month
I am giving this trade one month as well. The BOJ and FOMC both meet next week, along with scores of data points that could impact this trade. However, the long term trend is up and the pair is indicated to move higher so that is how I am trading. The pair was at new highs as recently as two weeks ago, then a sharp correction to the moving average and support has left us with a pair sitting just above strong support. I am trading calls with one month until expiry and a target entry below 104.25.
4. Euro Moving Lower
EUR/USD
Call/Put = Put
Entry = Above 1.3560
Expiration = One Month
The MLK holiday took some of the volume out of Monday trading as it did with the JPY. It also provided a good entry point for those still bearish on the euro. The EUR/USD pair has been moving lower since the first of the year and is making a soft bounce off of short term support at this time. Once the ECB meets, and fails to make a move to strengthen their currency, the FOMC taper will help to drive it lower. I am trading puts on the EUR/USD pair with one month until expiry and a target entry above 1.3560.
5. Don’t Get Bullish On Gold Yet
Gold
Call/Put = Put
Entry = Above $1255
Expiration= One Month
It is still too early to be bullish on gold. The recent near term rally is nothing more than wild speculation, driven mostly by FOMC hope/fear and economic data. The data is wishy washy and the Fed meeting is not until next week. I am trading puts on Gold with a target entry above $1255 and one month until expiry.
More Tips by the Geek – 01/20-27/2014 Trading Tips On Forum.
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That’s it for this week; Michael will be here next week with fresh trading tips. Meanwhile, we will be testing Michael’s tips to see what kind of an “expert” he really is. All trading assets and expiry times featured in Michael’s trading tips are based on CommuniTraders Binary Options Trading Platform.
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