Binary Options Analysis – Trade of the Week: USD/CHF 18th May 2015

Switzerland – Retail Sales

usd-chf-currencyAt GMT 7:15 a.m., the Swiss Federal Statistical Office released the year-over-year retail sales figure, which measures the change in the total value of sales made by the retail sector in the country. However, this figure is adjusted for inflation in order to offer an accurate overview.

Binary options traders consider the Swiss retail sales figure to be one of the main gauges of consumer confidence, which makes up the majority of the overall economic activity in Switzerland. Since consumer spending is directly correlated with consumer confidence, it can signal future economic activity as well.

Last month, the value of Swiss retail sales decreased by 3.1% and the forecast for May was set at an additional decrease of 2.0%. However, the actual figure came out much worse than what the binary options traders were expecting, a decrease of 2.8%.

United States – NAHB Housing Market Index

Later in the morning, at GMT 2:00 p.m., the US National Association of Home Builders (NAHB) will release its housing market index, which measures the level of a diffusion index based by surveying 900 home builders in the country.

Binary options traders consider the NAHB housing market index to be a major leading indicator of the overall US economy because the survey asks respondents to rate the relative level of current and future single-family home sales. Sale of single-family homes can signal future economic activity and GDP, which often directly affect the valuation of the US dollar against other major currencies.

In April, the NAHB housing market index reading came out at 56 and the forecast for this month is currently set at a slightly improved reading, 57.

Trade Recommendation for the USD/CHF

Chart USDCHF, D1, 2015.05.18 10:37 UTC

Last week, the USD/CHF penetrated below the key support level around 0.9150, but failed to close below this level on the first try. Later on May 14, USD/CHF price finally closed below this level on the daily time frame, but pulled back to 38.2% Fibonacci retracement level.

Given that the Swiss retail sales have decreased more than the forecast, the fundamental direction of the USD/CHF would be up for the day.

However, the overall trend in the USD/CHF has been down since early March, and it is unlikely that the change in the Swiss retail sector alone would be sufficient to reverse this downtrend.

Under the circumstances, it is recommended that binary options traders consider placing a PUT order once the USD/CHF price penetrates below last week’s low, which is at 0.9072. Because there is a high probability that the USD/CHF price will continue to go down once the support around the 0.9072 level is breached.

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