Stocks And Binary Options Update

US stocks rebounded on Tuesday as traders awaited Ben Bernanke’s final policy meeting as Governor of the Federal Reserve. New Head, Janet Yellen is waiting in the wings and expected to continue the dovish stance. We also saw a number of corporate earnings beat expectations.

The world’s biggest drugmaker, Pfizer, advanced by 2.6% after it reported better than expected earnings as a result of cost cutting and tax rate falls. Homebuilders also surged, by as much as 5.3%, after a report suggested US home prices climbed again in the last quarter.

Financial stocks also posted gains, with AIG up 2.6% and Bank of America higher by 2.58%. It was not all green for US stocks, however, as Apple tumbled 8% on lower than expected iPhone sales. The stock is down heavily after it reported numbers after hours on Monday.

Elsewhere in the financial markets, currencies were relatively quiet, while the US dollar gained against the euro, yen and Swiss franc. Dollar strength continues to go hand in hand with equity strength, however AUD/USD bucked the trend and continued its mini-rebound. Gold dropped, but not by much and currently trades around $1255.

Gold - UP

Yesterday, gold traded between it’s pivot and first support in what was a relatively tight range. The metal recorded a range of just 13 points in today’s session which is unusual given the precious metal’s recent price history.

Periods of low volatility rarely last long in gold so we may be on the brink of a break-out over the next couple of days. Inflation data, comments from the Fed, or equity weakness could all set the stage for a gold rebound. Binary options traders should look to bet UP and use the key pivot level as the guide.


GBP/USD - DOWN

Cable was unable to sustain gains on Tuesday as the currency failed to break past the first resistance level on two occasions. GBP/USD hit the first resistance and fell back to the pivot and ended the session with a bearish bias. Particularly since it has been unable to follow through on Monday’s gains.

On a longer term daily chart, GBP/USD is now at the top of it’s upper Bollinger Band and, having already reversed sharply from this band last week, there is another opportunity to sell GBP/USD here.

According to open position data from forex broker Oanda, 73.29% of traders currently hold short positions in the currency, getting close to be a significantly one-sided state. The more one-sided the market becomes the more chance there will be of GBP/USD falling back.

Binary options traders should use the moment to bet DOWN on GBP/USD and look for a move back towards the lower Bollinger Band. A possible 150 pips profit should be on the cards when the currency starts to head back down.