Last week ended with mixed results as all US stock indices finished lower on Friday. Binary options trading focusing on stock indices probably noticed the strong downtrend apparent in all markets as the DOW dropped 0.69% to 12801. The German stock index, the DAX, fell over 1.4% as the FTSE dropped 0.73%. So trading binary options could have been either very difficult or really easy on Friday for most. The reason is, most traders have a hard time trading into a new trend. It takes time get comfortable with a new way of looking at the market. Binary options traders actually have all the necessary tools to move from one trend to another quickly. The fact that positions aren’t held for very makes this shift from one trend to another rather easily. However, the uptrend in stock indices has been relatively bullish for the last 6 months, so a little correction on a random Friday should cause any binary options trader much problem.
Another interesting fact was that the price of oil dropped slightly. It’s not really of much relevance to most traders, as the price of Oil has been incredibly stable over the last 2 months hovering near $100. The price dropped very slightly on Friday to 99.36. Again, this isn’t very significant to any binary options traders. Even those that like trading range options should take care not to get to excited. The price of NO TOUCH and RANGE options on stable assets will be very high and likely imposable to turn a profit on. So why are we so interested in the price of oil? Well, we aren’t. We are interested in the price of the stock XOM. See the graph below.
Any binary traders who know a bit of technical analysis will notice a classic pattern of Head and Shoulders being formed. The stock price is sitting atop the support right now at 83.45 so any move below that tomorrow will constitute a serious break. The only way to be sure this is going to occur is by checking out the price of oil. Any drop of about $.5 or more will cause the stock price to drop below the support and cause the stock price to drop significantly.
The EUR/USD is in a range. Here trading a RANGE binary option could be a very good choice today. Just make sure the price of the forex pair doesn’t break above 1.3275 which is the current upper boundary of the range. This means that if the market stays around current rates near 1.3195, which is very close to the middle of the range, then the likelihood of the forex pair to make you money on a RANGE options increases greatly.
By David Fielder of the Binary Options Review and analysis site www.whyoptions.com