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 1.5660
• Upside Potential: The upside potential for this binary call option is 160 pips to 1.5820
• Downside Potential: The downside potential for this binary call option is 100 pips to 1.5560
The GBP/USD has been caught in a sideways trend over the past few trading sessions and was unable to breakout above its range or breakdown below its range. The top of its current sideways range is defined by its intra-day high of 1.5826 which was reached on November 27th 2014 and the bottom of its range by its intra-day low of 1.5541 which was reached on December 8th 2014. Inside this sideways trend a descending resistance level as well as an ascending support level has formed which are expected to guide the next move.
Price action is currently trading inside its horizontal support area which is being enforced by its ascending support level. The GBP/USD is anticipated to this merges support level and drift higher until it will breakout above its descending resistance level. Binary options traders can take advantage from the anticipated drift higher with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 1.5660 for a risk/reward ratio of 1.0/1.60.
The GBP/USD is trapped inside its triangle formation where volatility has been deflated. This is set to change as the triangles narrow s and the descending resistance level will pressure this currency pair into a breakdown while the ascending support level will provide upward momentum. Given the location of price action inside its horizontal support area it is unlikely that a breakdown will be able to materialize. This favors binary put options in the GBP/USD currency pair.
The GBP/USD will run into its first resistance around the 1.5720 mark which is where the descending resistance level will apply downward pressure to the expected drift higher. A breakout above this crucial resistance level and triangle formation will take the GBP/USD to its intra-day high of 1.5826 which was reached on November 27th 2014 from where a double top formation could limit any further advance without a new catalyst.
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:
Consumer Price Index for the month of November:
• Expectations: A monthly reading of 0.0% is expected for November, an annualized increase of 1.2%
• Previous Report’s Data: A monthly increase of 0.1% was reported in October, an annualized increase of 1.3%
• Impact on the British Pound: The avoidance of a deflationary reading in consumer inflation may suffice to further stabilize the British Pound inside its horizontal support area from where the upward drift can develop ; 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:
Housing Starts and Building Permits for the month of November:
• Expectations: An increase of 2.1% in housing starts is expected for November, a contraction of 3.4% in building permits
• Previous Report’s Data: An contraction of 2.8% in housing starts was reported in October, an increase of 4.8% in building permits
• Impact on the US Dollar: The expected contraction in building permits could overshadow the increase in housing starts and therefore apply downward pressure on the US Dollar which favors binary call options in the GBP/USD currency pair