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 1.6240
• Upside Potential: The upside potential for this binary call option is 290 pips to 1.6530
• Downside Potential: The downside potential for this binary call option is 85 pips to 1.6165
The GBP/USD experienced a sharp drop which was the combination of disappointment over the British economy and delay of interest rate hike as well as the pending vote on Scottish Independence. This plunged the GBP/USD from an intra-day high of 1.7191 which it reached on July 15th 2014 to an intra-day low of 1.6052 which it reached on September 10th 2014. The GBP/USD has since this intra-day low reversed sharply and launched a strong and steep reversal rally.
Price action is currently in the midst of an upswing which has broken out above initial resistance and expected to resume for several trading sessions. Binary options traders can benefit from the anticipated extension of the uptrend with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 1.6240 for a risk/reward ratio of 1.0/3.41.
The steep explosion higher has set several higher lows which is a positive signal for the GBP/USD and created a steep ascending support line which may be used by price action to continue its advance as it approaches a strong horizontal resistance line. The strength of the current advance may be strong enough to force a breakout which would allow the GBP/USD to accelerate its move higher.
The first major resistance test for the current uptrend awaits the GBP/USD at 1.6281 which is an intra-day low reached on September 5th 2014 just prior to the gap lower; a direct result of the latest poll figures for the vote on Scottish Independence. A successful breakout will take the GBP/USD to the 1.6445 level which is an intra-day low reached on September 3rd 2014 from where price action trended sideways before resuming its decline. The final resistance level is located at 1.6532 which is an intra-day low reached on August 24th 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:
Construction Output for the month of July:
• Expectations: A monthly increase of 0.6%, an annualized increase of 3.2%
• Previous Month’s Data: A monthly increase of 1.2% was reported in June, an annualized increase of 5.3%
• Impact on the British Pound: The continuation of the expansion in British construction output could provide the British Pound with more upside potential; 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:
Retail Sales for the month of August:
• Expectations: An increase of 0.6%, excluding autos an increase of 0.3%
• Previous Month’s Data: A reading of 0.0% was reported in July, excluding autos an increase of 0.1%
• Impact on the US Dollar: Expectations may be too optimistic which opens this report up for a downward surprise; this favors binary call options in the GBP/USD currency pair