Today’s Binary Options Trading Strategy:
• Currency Pair: GBP/USD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 1.5150
• Upside Potential: The upside potential for this binary call option is 430 pips to 1.5580
• Downside Potential: The downside potential for this binary call option is 200 pips to 1.4950
The GBP/USD is entrapped in a sideways trend inside its horizontal support level which witnessed a false breakout with an intra-day low of 1.4951 recorded on January 23rd 2015 from where price action managed to recover and drift back inside its horizontal support level. The sideways trend developed after a severe move to the downside was further accelerated from its intra-day high of 1.5620 which was reached on December 31st 2014. An ascending support level was formed and has intersected its horizontal support level which has increased upward pressure on the GBP/USD.
Price action is now trading inside its horizontal support level alongside its ascending support level from where an increase in upward pressure is anticipated. The GBP/USD is likely to take this enforced support level and move to the upside. Binary options traders can profit from the expected move to the upside with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 1.5150 for a risk/reward ratio of 1.0/2.15.
Volatility has decreased during the sideways trend, but is expected to pick-up as the GBP/USD is trapped inside a narrow triangle formation which has increases pressure on this currency pair to make its next move. Sellers are expected to use the descending resistance level in order to apply pressure on the GBP/USD for a breakout which is likely to be limited to its current intra-day low of 1.4951. Buyers are likely to take the ascending support level which enforces its horizontal support level for a sustained move to the upside. This favors binary call options in the GBP/USD currency pair.
The GBP/USD will face its first resistance level, after a successful breakout above its narrow descending resistance level, at its intra-day high of 1.5319 which was reached on January 5th 2015. This level represents the high reached after a gap to the downside occurred on the same day. Given the sharp drop prior to the gap there is no meaningful resistance level until the GBP/USD reaches its horizontal support level at 1.5480 which is the intra-day high reached on January 2nd 2015. The final resistance level awaits the GBP/USD at its intra-day high of 1.5620 which was recorded on December 31st 2014.
The following economic data out of the United Kingdom is expected to impact the base currency, the British pound, of the GBP/USD currency pair:
CBI Reported Sales for the month of January:
• Expectations: A monthly reading of 32 is expected for January
• Previous Report’s Data: A monthly reading of 61 was reported in December
• Impact on the British pound: The expected plunge in CBI Reported Sales is likely to be overshadowed by housing data out of the United States; this favors binary call options in the GBP/USD currency pair
In addition the following economic report out of the United States is expected to impact the quote currency, the US dollar, of the GBP/USD currency pair:
Pending Home Sales for the month of December:
• Expectations: A monthly increase of 0.5% is expected for December, an annualized increase of 10.9%
• Previous Report’s Data: A monthly increase of 0.8% was reported for November, an annualized increase of 1.7%
• Impact on the US dollar: The anticipated monthly slowdown in pending home sales is expected to apply downward pressure on the US dollar which favors binary call options in the GBP/USD currency pair