Binary Option Setups: Week of August 22nd – 26th

BinaryOptionsNow | Published on August 21, 2011 at 2:59 pm

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Global markets experienced another extremely volatile week this week. Yet many people still fail to realize that the more the markets fluctuate the better the conditions are for making profitable short term trades. Recent news regarding the potential credit downgrade of European countries and rumors of several international banks on the verge of collapse creates an environment of economic turbulence that provides excellent opportunities to profit. The prefered method of taking advantage of market volatility is the trading of forex pairs using binary options. Be sure to take advantage of the current short-term volatility in the major pairs including the US dollar, the GBP and the Euro.

Potential Binary Option Setups

Here is a list of economic events that could provide the right conditions for a lucrative Forex Binary Option investment to finish in-the-money this week:

1. German ZEW Economic Sentiment (Monthly) – Tuesday, July 19th 10:00 A.M. GMT – The German Zentrum für Europäische Wirtschaftsforschung (ZEW) Economic Sentiment survey determines the sentiment of German institutional investors based on the opinions of 350 German institutional investors and analysts.

A number above 0 indicates an overall optimistic outlook for the economy while a number below 0 indicates a more pessimistic outlook. The previous ZEW reading was released on July 19st and came out much lower than the predicted number of -12.3 measuring in at -15.1. This week, the forecast is very pessimistic again for -26.0, indicating a worsening economic sentiment outlook.

If a trader believes that the ZEW Economic Sentiment report’s outcome is likely to affect the trading of the euro, one way to profit would be to invest in a EUR/USD binary option that expires 30 minutes to one hour after the report is released.

If the general sentiment is that the ZEW will come out far below the prediction of -26.0, it may be prudent to invest in a PUT EUR/USD binary option with the idea that the euro will decrease in value vis-a-vis the US dollar.

If there is rather grounds for optimism and the feeling is that the ZEW reading will be much higher than -26.0, indicating a positive outlook for the EU economy, it may be prudent to invest in a CALL EUR/USD binary option with the expectation that the euro will increase in value against the greenback.

 

2. U.S. Durable Goods Orders and Core Durable Goods Orders (Monthly) – Wednesday, August 24th 12:30 A.M. GMT –

Due out on Wednesday, U.S. Durable Goods Orders and Core Durable Goods Orders generally impact the entire forex market. A forex binary strangle on EURUSD, GBPUSD or any of the commodity currencies versus the U.S. Dollar may offer the binary option trader an opportunity to take advantage of the volatility inherent in the release of these two key indicators.

The binary USD call option may profit if the Durable Goods Order number is significantly higher than  2.0% that is expected, or the Core Durable Goods Orders comes out above the -0.4% consensus. Conversely, the binary USD put option may be profitable if either or both numbers come out substantially lower than the consensus.

3. US Initial Jobless Data (Weekly) – Thursday, August 25th 12:30 GMT – The Initial Jobless Claims is a seasonally adjusted  measure of the number of people who file for unemployment benefits during the given week. This information is weekly compiled by the Department of Labor. The number of jobless claims is used as a key measure of the health of the American job market, as a series of increases indicates that there are fewer people being hired.

A higher than anticipated  reading should be considered as negative/bearish for the USD, while a lower than forecasted  reading should be taken as positive/bullish for the US currency.

The previous figure released on August 18th was 408K which was quite negative since the previous forecast was for 400K. The forecast this month is quite pessimistic since it is 405K.

An opportunity to profit from a EUR/USD Forex binary option may present itself if the US Initial Jobless Data is much higher or lower than the predicted outcome.

Should the reading be higher than expected, this could indicate that expectations for the USD may be negatively impacted by this data and lose ground against its EU counterpart. In that case, a CALL on a EUR/USD binary option investment made at or around the release of the data may finish in-the-money.

If, on the contrary, the release is more positive than forecasted, the US dollar may in turn be buoyed by these expectations and increase in value against the EU’s single currency. In this case, an investment in a PUT on a EUR/USD binary option at or around the release of the employment figures may finish in-the-money.

4. UK GDP (Quarterly) – Friday, August 26th 8:30 A.M. GMT – The Gross Domestic Product (GDP) is the broadest measure of economic activity and is a key indicator for the economy’s health. It is provided by the National Statistics. The quarterly percent changes in GDP shows the growth rate of the economy as a whole.  A higher than expected reading should be taken as positive for the UK economy, while a lower than expected reading should be taken as negative for the Pound.

The previous UK GDP released on July 26th came out with a percentage change of 0.2% exactly as forecasted by analysts. The forecast for Friday is again 0.2%.

If the general sentiment is that the quarterly percent changes in UK GDP will come out far below the prediction of 0.2%, it may be prudent to invest in a PUT on a GBP/USD binary option with the idea that Pound will decline in value vis-a-vis the dollar.

If, you rather have the feeling that the UK GDP change will be much higher than 0.5%, indicating a positive outlook for the UK economy, it may be prudent to invest in a CALL on a GDP/USD binary option with the expectation that the Pound will increase in value against the US currency.

5. US GDP (Quarterly) – Friday, August 26th 8:30 A.M. GMT – In the US, the GDP is released by the Bureau of Economic Analysis.

The previous American GDP released on July 29th came out with a disappointing percentage change of 1.3% while analysts forecasted a rise by 1.7%. The forecast for Friday is positive change by 1.1%.

If, on one hand, there is grounds for optimism and your feeling is that the US GDP reading will be much higher than 1.1%%, indicating a positive outlook for the American economy, it may be lucrative to invest in a PUT on a EUR/USD binary option with the expectation that the Euro will decrease in value against the US currency.

If, on the other hand, you believe that the quarterly percent changes in US GDP will come out below the forecast of 1.1%, it may be prudent to invest in a CALL on a EUR/USD binary option anticipating that Euro will gain ground against the dollar.

 

For more binary options news and information, follow us on Twitter!

 

As always, keep in mind that the major forex pairs are constantly being influenced by many other factors beyond the release of economic data and that previous results do not guarantee future outcomes.

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Binary Option Setups: Week of August 22nd – 26th, 5.0 out of 5 based on 1 rating

Comments

  • Yasin says:

    This article makes a lot of sense according to the current Market Volatility. I outlook the USD to weaken against GBP on 26th before any corrections are made because Investors have lost confidence on the US Economic outlook.

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