The U.S. non-farm payroll report is one which tends to present excellent binary options trade setups. Whether favorable or unfavorable in regard to the overall economy, this report is often linked to large price movements which can be easy to quickly identify. Market analysts will provide their own predictions about what the numbers may show, and while these may not be entirely accurate, they can serve as a good general guide for determining how investors may react to the actual data.
The NFP report comes out on the first Friday of each calendar month. The overall condition of the U.S. economy is assessed based upon this employment data. As soon as the data is released, the price of the USD and U.S. indexes are likely to be on the move. A positive report is likely to result in increasing values, while a negative report is likely to result in decreasing prices. There could also be increases or decreases based upon just how far apart the actual data is in relation to what market analysts were expecting.
When the data is far from what was expected, traders can start to look for a breakout, with the price exceeding key support or resistance levels. The price of impacted asset may even exceed all time highs or lows. Within a technical chart, you’ll be watching for the price of the asset to exceed the high point of the first few candles. Once it does, the next step will be to look for a signal to trade based upon the new high or low, but be aware that a false breakout is possible. Ideally, the price will move past the high or low level very quickly, leaving the selection between Put or Call clear.
Note that pivot points and older areas of support and resistance tend to take on a reduced role when trading just after the release of the non-farm payroll report. The price of the selected asset could easily exceed these levels, and without any advance notice. The truth of the matter is that support and resistance lines are of little value when data reports are not what was expected. However, they will once again become valuable tools once sentiment has calmed, typically after a period of thirty minutes to one hour.
In addition to the possibility of trading a breakout, there could be the chance to trade a reversal. Once a breakout, or trending movement has occurred, be watching your chart for signs of a reversal. In this situation, the price of the asset should be trending upward or downward for no less than ten minutes after the release of the NFP report. Once ten minutes have passed, watch for the price to fall to the low candle. If this low is exceeded, the assumption is that an actual reversal is taking place.
It is wise to make plans to trade the non-farm payroll report in advance. Note the date and time of the release, along with what the market experts are expecting the report to reveal. This is just one of several types of reports that the aforementioned binary options strategy can be used to trade with. However, do keep in mind that some reports do have a lesser impact on asset prices and therefore breakouts will not be as common as they are when the NFP is released.