Five Binary Trades on the EURUSD on June 4, 2013

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Five Binary Trades on the EUR/USD on June 4, 2020

I took five binary trades today with good results, winning four of the five. I had actually been watching the market for over two hours before I took my first trade but nothing had really set up to my liking by that point. I did have a 38.2% Fibonacci retracement level in play today, but there wasn’t really anything supporting a Fib trade before 6AM EST. If I’m going to trade a Fibonacci level, I at least want there to be some additional factor supporting the trade, like a pivot point, or better yet, a notable support or resistance level created by previous price history.

I took my first trade of the day on the 6:35 candle. I was looking at 1.30853 as a potential area of resistance on the pair (top red line that I have drawn in on the image above). Price had reversed at that level most noticeably at 4:35AM EST, which was the current high-of-day (HOD) for the EUR/USD at that point. You can also notice that the wick of the red 3:15 candle had come up to touch 1.30853, as well. It wasn’t a perfect set-up, but HOD/LOD (high-of-day/low-of-day) levels can be valid support and resistance points to look out for. Price touched 1.30853 on the 6:35 candle. I took the trade just before the five-minute trade lock-out as price was wicking back down below 1.30853. Normally, in a case like this, I might have waited for the candle to close below the targeted level before taking the trade on the touch of 1.30853 on the next candle. But I was simply looking to take a very short-term bounce off 1.30853. I would have much more confidence of the level continuing to hold for just five minutes than I would for another 15-20 minutes if I had gotten in for the next expiry. Trend was up for the morning overall, so I had to also be weary that I going a bit against the grain of the market.

Luckily for me, getting in for just a short 5-6 minute trade was the right decision, as price closed in my favor for about a three-pip winner. Yet on the next candle, price continued to follow the upward trend for the morning and went back above the level at which I had taken my put option.

My next trade was on the 7:30 candle and was again on the touch of 1.30853. This time, of course, it was a call option. Price had come back down to 1.30853 on the 7:25 candle and rejected the level, which to me was a valid signal that I should take a call option on the touch of the level on the 7:30 candle. This produced a three-and-a-half pip winner.

Before I go on to my next trade, if you’ve looked at the chart to some extent, you might be wondering why I didn’t take a call option on the 7:00 candle, which was another touch of 1.30853. The reason was that I simply didn’t have a clear idea of what the market was going to do. Therefore, I was uncomfortable with taking the trade. Based on the price action I was observing, there was a bit of a thrust through the previous resistance point of 1.30853, but downward momentum on the 6:55 candle was fairly strong – about ten pips at one point. Even though that price bar rejected 1.30853 (normally a signal that I take as a possible trade set-up on the retouch of the level on the next candle), I was uncertain whether the level wanted to hold as support or bust back through it. In hindsight, it would have been a good trade and given me almost a ten-pip winner, but I simply didn’t want to put my money on a call option based on the type of action I was observing.

You might also be wondering why I hadn’t considered a call option upon another touch, rejection, and retouch of the level on the 8:20 candle. The one thing I was leery about with regard to that set-up was the break and close below 1.30853 on the 7:55 candle (long red bar). Even though price eventually climbed back above that level and stayed above for another half-hour, that was an indication to me that a price reversal might be in store shortly thereafter. Granted, the 8:20 potential call option set-up would have been another trade that would have worked, but my impression that the EUR/USD would head back down was confirmed on the 8:30 candle with a huge price movement. Those who read my blog with some regularity will probably perceive that I tend to be pretty conservative and patient with trade set-ups. That’s definitely the case and I’m fairly certain that I probably would have yet to make a dime trading if I didn’t have that temperament toward my trades.

My next trade was on the 8:40 candle. Momentum and trend from the past hour had been downward, but I had a couple things working for me on this call option set-up. I had, of course, the 38.2% Fibonacci retracement line in play, which I had drawn in on the daily time compression. I also had some previous price support from earlier in the day working in my favor, particularly on the 6:15 and 5:30 candles, and some minor support seen even earlier at that level on the 4:15 and 3:20 candles. So I took a call option on the touch of the 1.30727 price level (where the 38.2 Fib was located). In hindsight, it looks like a pretty ugly trade. It went against me for practically the entire trade, going eight pips out of favor before settling as about a three-pip loss. It was a pretty good set-up, but I can understand why I lost the trade. More liquidity was entering the market at this point and although there were definitely some buyers in play at 1.30727, following the same type of logic I did, but the sellers simply kept on outweighing the buyers at this point in the market and drove price below my level.

But things happen and all one can do is look for future points in the market that might offer quality set-ups. For me, I could have considered a call option at 1.30666 where there had been price support at 5AM EST and resistance at 2AM. But I didn’t want to fight against the trend once again, although it’s a trade that would have won. So I decided that my next area for call option set-ups would be all the way down at 1.30455 where the pivot point was located. There was also a 61.8% Fibonacci retracement in play at that area, giving me an area of confluence on which to base my trade.

My next trade, however, was a put option back up at 1.30727. Momentum had been up a bit just before my entry on the 9:40 candle. However, price was clearly experiencing some resistance at that level so after the rejection observed on the 9:35 bar I took a put option on the touch of 1.30727 on the 9:40 candle. I had three factors working for me on this trade:

1. support (and now potential resistance) from previous price history

2. the 38.2% Fibonacci retracement and

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3. an overall downward trend

It went against me for a bit before wicking nicely and closing out for a solid eight-pip winner.

My final trade of the morning came on the 1.30455 price level that I had mentioned earlier regarding the pivot level. Of course, I didn’t trade it on the first touch. Momentum was significantly to the south-side on the first touch. But I got a strong bounce off the pivot on the next candle (10:20 bar) so I was able to get in the trade on the subsequent touch of 1.30455 on the 10:25 candle. The first 5-7 minutes of the trade weren’t spectacular and it was against me most of that time, but price was holding reasonably well and it eventually wicked back above and gave me my best winner of the day (12 pips) by expiration.

I called it quits at that point after a solid 4/5 ITM day.

As always, please leave any questions, comments, and/or feedback in the comments section below. I definitely welcome any and all inquiries.

7 Binary Options

The currency pair is classified as major a+since it is the most traded currency pair in the world and they are very close in value. The difference in value, i.e. the strength of the currencies depend on the economic status of the states they represent, coming down to the Eurozone and the US economy.

The EURUSD is the most traded and most liquid pair since this currency pair is being sold and bought numerous times on a daily basis. It goes over the trading table as the best know currency pair. The special feature which draws so many traders to the EURUSD is the small spread. Namely, these currencies are close in value and they do not account for major losses when it comes to individual trades. Since binary options are close to Forex trading, this pair is one of the highlights in the options market as well.

Before you enter a binary options trade on this currency pair you might want to know the following:

  • The greatest market activity of this pair takes place during North American and European sessions and you should trade only during USA and European sessions to avoid a standstill of the currencies;
  • The Asian market activity time is also not to be neglected for trading ranges with a special target on One Touch options given the consolidation of EURUSD in Asia;
  • EURUSD trading is highly popular since it involves the two biggest global economies the USA and Eurozone which reflect on minor economies as well.

Follow The News of the European Market

To stay in the loop, it is very important to follow the economic news related to this currency pair since it contains a lot of useful information regarding price movements of the two currencies. As a committed trader, you should take a look at the European Consumer Price Index (CPI) since it reveals the inflation status which is one of the key factors for the European Central Bank when drafting its monetary policy.

The European Purchasing Manager Index (PMI) represents also an important source of economic information given that it examines individual sectors and if they are growing or declining which is yet another hint as the European Central Bank uses the data and classifies them as dovish or hawkish/bullish or bearish.

Traders also look at the EU GDP (Gross Domestic Product) and the course of the unemployment rate in the EU when they trade the EURUSD currency pair. Follow the press conferences of the sessions of the ECB (European Central Bank) whereby the ECB President answers interesting questions on the market, an event which causes fluctuations in the market since the EURUSD trade frequency is particularly volatile during these events.

All of the economic news and releases give useful information to traders and can help them acquire more knowledge related to the economic movement, but they do not represent an instant success ticket, but rather give hints to traders of what is going happen at the next meeting and what decisions will be taken. A trader’s job is to interpret the information and link them to the EURUSD price movements, e.g. if inflation is greater than predicted by the ECB, you can prepare yourself for rates being cut.

Follow The News on the US Market

Since the USA is the biggest economy, closely followed by the Eurozone, economic news is being released regularly on a monthly basis and the news which one should take to heart as a trader are discussed below.

The Federal Reserve or the US Central Bank has a dual role and its decisions can be guessed from employment data and inflation or CPI. As a trader, make sure to take into account releases relating to these two factors, but some other sources will also be to your benefit. For example, the Institute for Supply Management (ISM), Retail Sales, Manufacturing and Non-Manufacturing, GDP, Private payrolls (ADP)Producer Price Index (PPI), etc.

Studying the different information from all of the listed sources can help you gain a better understanding of the market.

The Goal of Following Economic News

Well, of you follow the big economic releases, you will notice that the markets show the most intense volatility during those periods. Technical factors are the trigger for market movements but the reason for movement is news release which has been already proven in the past.

In order to give you a full picture let’s imagine that news on the unemployment rate in the Eurozone is being announced during the London market session and the rate is higher than initially predicted. Such an information will automatically lower the value of the EURUSD pair since everyone will be looking to get rid of the depreciating Euro since they know that the ECB will be looking to modify the monetary policy in order to make up for the bigger unemployment rate. But, if during US news release it turns out that the US GDP is not indicating growth but rather a recession, it will completely out-balance or undo the Eurozone unemployment crisis and the EURUSD will automatically start to climb in value in the market.

How to Make Money Trading EUR/USD?

Trading currencies has been with us for a long time. Binary options trading is a fairly new frontier considering that it has not reached its peak yet; it is still in the growth phase as there are many people all over the world who do not even know it exists. For those in it, it a good way to make money by making trades from their shifting values in relation to one another.

In traditional forex trading, you actually buy the currency when its value has dropped and sell it when it rises and trades of that nature. This is what most people will tell you about forex trading. Binary options trading on the other hand, is making trades on the value of currencies but you do not buy the actual currencies. You trade in binary option pairs.

Binary Option Pairs

This is also referred to as ‘pairs trading’. In this type of trading, you will make predictions on the relative behavior of one currency as compared to another within a predetermined period of time. To put it simply, you select two currencies and put them in competition. You then predict the changes in value of one of the assets against the other. The value can either rise or fall within the predetermined period. A correct prediction is what makes you a profit while a losing prediction loses you your investment in that particular trade.

Binary trading is considered as one the ‘Market Neutral’ trades because you can make money whichever direction the values go.

EUR/USD is the most popular currency pair

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    Trading EUR/USD pairs

    This is the most traded pair in binary options trading today and trend looks likely to continue for the foreseeable future. It juxtaposes the Us Dollar against the EU Euro. The two are the most liquid currencies today in the global currency markets and this adds to their popularity with binary options traders. The two are also the most traded currencies in the traditional forex markets.

    Like in the more widely known currency trading, the economic fortunes of the United States and that of the Eurozone countries play a big part in the value movements off these currencies. That is not to imply that they are immune to the happenings in the economies of the rest of the world. An event in the major indices in Asia is likely to cause more than just ripples in the USD and EUR values.

    Considerations prior to trading the EUR/USD

    Since you cannot trade blindly or make guesses on which way to trade this pair, there are a few general factors that you should take into consideration. This is before considering the other more specific news and events that can influence price changes. These factors are:

    • Trading time differences make binary options trading tricky and interesting at the same time. The North Atlantic trading sessions open a good number of hours after the Asian markets open. This means that if you are trading in the American and the European session you need to make short expiry times with this pair while avoiding the Asian currencies or making longer expiry times over short ones with this group.
    • The Asian session is usually a little slow for the American and European currencies. This means you should take longer expiry times on this pair.

    What makes price shifts in the EUR/USD pair?

    People always talk about how one currency can sneeze and another thousands of miles away catches a cold. This is true with the EUR/USD pair, but the analogy of sneezes and colds is not something that happens all the time. Economic news out of both Europe and the US will not make big changes in the pair, but there will be changes all the same and traders can make trades with these changes which will change from time to time according to what is happening in both economic zones. The fortunes of those countries’ economies are hardly recognizable from daily news unless there are major events with a significance implication to those two economic zones.

    What brings out more pronounced changes is the economic releases or announcements by various bodies in both zones about key economic performance indicators like changes in interest rates, unemployment figures, changes in value of production, consumption and exports.

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    Key economic releases to watch in Europe

    Among the key releases that you should watch out for in Europe that are likely to cause some changes in the values of the EUR/USD are the following:

    • Consumer Price Index (CPI): This is the most important performance indicator to come from the Eurozone. It is a report on the situation in Eurozone as regards inflation and what the European Central Bank (ECB) is doing to support positive results or to counter negative results. It is the main determinant of what the ECB will do to shape the short-term and long-term monetary policy.
    • Purchasing Manager Index (PMI): This indictor will show the performance of a sector in terms of expansion and contraction. This will influence ECB’s decisions arising from the data.
    • Gross Domestic Product (GDP): This release follows a meeting of top Eurozone economists every month and the data from such meetings shows the relative situation in the Eurozone economies.
    • Unemployment figures: These too are performance indicators. An increase in new jobs or their retention is a good indicator while loss of jobs and increased unemployment rates is not.

    Key economic releases to watch in United States

    The US economy is the largest in the world and so it is expected that there will be many releases on the state of the economy and its various sectors each and every month. These releases are also expected to have an effect in global indices as well as the currency markets including the EUR/USD pairings. These are the key releases you should watch out for:

    • Interest rates: There is always excitement and consternation in equal measure every time an announcement on the raising or reducing interest rates is imminent. The announcement usually causes movements in price as traders shift positions on the likely outcomes.
    • Jobs data: Unemployment rates, job losses and creation of new jobs are key indicators of the state of the economy and this will influences the dollar value in relation to the Euro and other currencies as well. This is especially so for the Non-Farm Payrolls data.
    • Consumer Price Index: As in Europe, this release is important too as an indicator of the state of the economy.
    • Others: Other important releases to watch are: Retail Sales, Institute for Supply Management, GDP, Producer Price Index, Durable Goods Orders, and other releases.

    All these releases assist traders to make informed choices when they are trading the EUR/USD pairs. Of importance is any release by the ECB and the Federal Reserve.

    The behavior of the EUR/USD in relation to releases, news and events

    Market volatility is to be expected at all times. It is only the level that changes between high and low. There many factors that determine how the EUR/USD pair behaves and this will include the time the release, news or event happens, the reasons for their happening and the financial implications of such factors. These are what you will need to collate, synthesize and analyze to enable you to come up with more winning trades than losing ones on this pair, and this is essence of all binary options trading.

    Trading with brokers and robots

    Trades and robots will promise to give you winning signals so that you can make profits with your trades. They use the same indicators noted above but they have the added advantage of having created algorithms to help them with all the analyzing and synthesizing. This is where they will always have one on you when it comes to binary options trading. The signals they promise will give winning trades in most cases if you are trading with the right brokers and platforms. Issues of scams abound and a careful selection process is demanded of you if you do not want your investment to fall into the wrong hands.

    Trading with the EUR/USD pair is preferred by most traders in the binary options market because it is always rising and falling. During the NorthAmerican and European trading sessions, traders who prefer short expiry periods for their trades have a busy time. The volatility makes it an interesting place to be as the values change rapidly, sometimes in periods as short as 60 seconds. In the Asian trading sessions, traders in the EUR/USD will be experiencing a lull of some sort. At this time they will mostly be making longer term expiry periods because the movement in values is not as rapid as it is during the North American sessions.

    With the expected growth and expansion of binary options trading in both the players (traders, brokers and trading platforms) and in the traded volumes, the EUR/USD pair will continue to dominate proceedings in the currency markets. The best thing is to ride with it and always keep watch of the main indicators as well as the releases from both economic zones.

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