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Originaly posted by Michael Hodges.

U.S Markets Treading Water

S&P 500
Call/Put = Call
Entry = Below 1805
Expiration = One Week

The Santa Rally is now the big question on the table for traders. Will it or wont it come? I think the former. The data has been pretty good in my opinion, it shows expansion and declining unemployment. At least here in the U.S. So long as the data this week does not damage the idea that the economy is still on track the markets should keep going up. QE is still in place and that is what has really been driving the market. Whether or not you believe QE and the rising market are directly related QE at least is a signal that the economy is still in a rebuilding phase and the data shows the economy is on the rise.

Why Buy Gold?

Call/Put = Put
Entry = Above $1235
Expiry = One Week

I can’t see any reason why you should buy gold, unless you are buying a put of course. Gold prices are falling and falling hard. The metal lost another $20 or so at the open of this week and is likely going to retest lows near to $1200 very soon. Indicators are bearish with convergences suggesting lower prices ahead. I am trading puts with a target entry above $1235 and one week until expiry.

Kuroda Moves Yen

Call/Put = Call
Entry = Below 103.00
Expiry = One Week

Talk from Kuroda has raised speculation the BOJ could increase QE at it’s next meeting. The bank chief said once again that the bank would do whatever it took to reach inflation goals and other targets set. This means that there could be an addition to the already $70 trillion a month QE program in place today. An actual increase could help send the USD/JPY above current resistance around 103.75. Until then I am bullish on the pair and trading calls. My target entry for the week is below the 103 level with one week until expiry.