• Currency Pair: EURCAD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 1.4090
• Upside Potential: The upside potential for this binary call option is 240 pips to 1.4330
• Downside Potential: The downside potential for this binary call option is 90 pips to 1.4000
The EURCAD has experienced a prolonged move lower which created three lower highs and a descending resistance line which has exercised downward pressure on this currency pair. The current move lower was initiated after the EURCAD reached an intra-day high of 1.4387 on September 15th 2014 to an intra-day low of 1.4011 which it reached on October 2nd 2014. This intra-day low also formed a double bottom formation which is a bullish chart pattern.
Price action did bounce off of the double bottom formation which led to a false breakout above the descending resistance level before retreating back below it. Momentum is expected to force another breakout which could take the EURCAD back into resistance. Binary options traders can benefit from the pending breakout with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 1.4090 for a risk/reward ratio of 1.0/2.67.
Volatility is expected to spike as buyers and sellers will face off at a crucial support level. Buyers will likely attempt a second breakout above the descending resistance level and a close above it should provide further upside potential. Sellers are expected to force the EURCAD lower, but any move to the downside will be limited given the potential for a triple bottom formation and therefore any downward move from current level should be taken as a better entry opportunity for binary call options in the EURCAD.
The first resistance level after a successful breakout above the descending resistance level is located at the 1.4247 level which is an intra-day high reached on September 24th 2014 and was able to previously reverse a move higher. A breakout above this level will take the EURCAD back into its intra-day high of 1.4387 which it reached on September 15th 2014 where a double top formation may emerge.
The following economic data out of the Eurozone is expected to impact the the base currency, the Euro, of the EURCAD currency pair:
German Factory Orders for the month of August:
• Expectations: A monthly contraction of 2.5%, an annualized increase of 2.6%
• Previous Report’s Data: A monthly increase of 4.6% was reported in July, an annualized increase of 4.9%
• Impact on the Euro: The expected continuation in annualized German factory expansion should exercise upward pressure in the Euro which favors binary call options in the EURCAD currency pair
In addition the following economic report out of Canada is expected to impact the quote currency, the Canadian Dollar, of the GBPCAD currency pair:
Ivey Purchasing Managers Index for the month of September:
• Expectations: A reading of 52.5 is expected for the month of September
• Previous Report’s Data: A reading of 50.9 was reported for the month of August
• Impact on the Canadian Dollar: Expectations for the Canadian Ivey PMI are very optimistic which leaves the Canadian Dollar vulnerable for disappointment; this favors binary call options in the EURCAD currency pair.