Today’s Binary Options Trading Strategy:
• Currency Pair: EURGBP
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 0.7130
• Upside Potential: The upside potential for this binary call option is 230 pips to 0.7360
• Downside Potential: The downside potential for this binary call option is 130 pips to 0.7000
The EURGBP experienced a capitulation sell-off which extended its current move to the downside into a new horizontal support level with an intra-day low of 0.7120 which was recorded today on April 23rd 2015. The corrective phase emerged from its intra-day high of 0.7379 reached on April 3rd 2015. This level represents a lower high as compared to its previous intra-day high of 0.7384 which was recorded on March 26th 2015. As a result of the move lower a falling wedge formation has emerged and further downside potential is limited.
Price action is currently stabilizing inside of its horizontal support level which is being embraced by its descending support level as well as its descending resistance level. The EURGBP is expected to successfully breakout above its horizontal support level and accelerate to the upside. Binary options traders can take advantage from the anticipated breakout with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 0.7130 for a risk/reward ratio of 1.0/1.77.
Volatility decreased during the corrective phase which led to the formation of the falling wedge formation, a bullish chart pattern with a wide base and a narrowing cone, but an increase in volatility is anticipated inside of an important horizontal support level. Sellers are likely to attempt a breakdown below its horizontal support level in order to keep the corrective phase intact. Buyers are expected to take the bullish chart pattern combined with the horizontal support level as a platform to pressure the EURGBP into a breakout from where it can accelerate to the upside. This favors binary call options in the EURGBP currency pair.
The EURGBP will face its first resistance level, after a successful breakout above its horizontal support level, at its intra-day low of 0.7222 which was reached on March 31st 2015. This level represents the origin of its descending support level. A breakout above this level will take the EURGBP to its intra-day high of 0.7314 recorded on April 8th 2015. The final resistance level is located at its descending resistance level around the 0.7360 mark.
The following economic data out of the Eurozone is expected to impact the base currency, the Euro, of the EURGBP currency pair:
Eurozone PMI for the month of April:
• Expectations: A level of 54.4 is expected in the Eurozone Composite PMI for the month of April, a level of 52.6 in the Eurozone Manufacturing PMI and a level of 54.5 in the Eurozone Services PMI
• Previous Report’s Data: A level of 54.0 was reported in the Eurozone Composite PMI for the month of March, a level of 52.2 in the Eurozone Manufacturing PMI and a level of 54.2 in the Eurozone Services PMI
• Impact on the Euro: The expected increase across the board out of the Eurozone PMI is likely to pressure the Euro to the upside; this favors binary call options in the EURGBP currency pair
In addition the following economic report out of the United Kingdom is expected to impact the quote currency, the British Pound, of the EURGBP currency pair:
Retail Sales for the month of March:
• Expectations: A monthly increase of 0.5% is expected for March, an annualized increase of 5.5%
• Previous Report’s Data: A monthly increase of 0.7% was reported in February, an annualized increase of 5.1%
• Impact on the British Pound: The anticipated report on retail sales out of the United Kingdom may not suffice to apply upward pressure on the British Pound which favors binary call options in the EURGBP currency pair