August 13th 2014 6:27am GMT, London UK
Today’s Binary Options Trading Strategy:
• Currency Pair: EURGBP
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek call options on dips below 0.7950
• Upside Potential: The upside potential for this call option is 200 pips to 0.8250
• Downside Potential: The downside potential for this call option is 75 pips to 0.7875
The EURGBP has rallied over the past fifteen trading days. The current rally is a reversal rally after a sharp-sell off took this currency pair from an intra-day high of 0.8314 reached on April 3rd 2014 to an intra-day low of 0.7874 reached on July 23rd 2014 from where the current reversal started begun. Price action has drifted higher over the past fifteen trading days and set a series of higher highs and lower lows.
After reaching its most recent intra-day high of 0.7997 on August 8th 2014 the EURGBP has reversed back into its ascending support level formed by a series of higher lows. Binary options traders can take advantage from the expected continuation of the rally with a call option. Today’s binary options trading strategy suggests call options to be placed below 0.7950 for a risk/reward ratio of 1.0/2.67.
The drift higher as well as the series of higher lows which formed created an ascending support level which intersects with a horizontal support level and therefore binary call options are recommended. As price action tests the current support level for a fifth time trading may become volatile with a false breakdown which should be regarded as a great entry opportunity for a binary call option.
The continuation of the rally is expected to meet major resistance around the 0.7997 level which is the most recent intra-day high reached during the reversal rally. A breakout is expected which would be in-line with the current composition of the rally which should take the EURGBP to the 0.8065 level; a previous sell-off low. A successful breakout will clear the way to the 0.8250 level without major resistance levels in the way.
The following economic data out of the Eurozone is expected to impact the base currency, the Euro, of the EURGBP currency pair:
German Consumer Price Index:
• Expectations: Final July German CPI at 0.3% monthly and 0.8% annualized, EU Harmonized CPI at 0.3% monthly and 0.8% annualized
• Previous Month’s Data: June German CPI at 0.3% monthly and 0.8% annualized, EU Harmonized CPI at 0.3% monthly and 0.8% annualized
• Impact on Euro: The European Central Bank is closely following inflation data and with Germany being the Eurozone’s largest economy an increase in inflation for July could rally the Euro
Eurozone Industrial Production:
• Expectations: Monthly increase of 0.4% in June, annualized increase of 0.2%
• Previous Month’s Data: Monthly contraction of 1.1% in May, annualized increase of 0.5%
• Impact on Euro: An increase in industrial production at 0.4% and above is likely to be taken as a very positive development and could further push the Euro higher which favors binary call options in the EURGBP
In addition the following economic report out of the UK is expected to impact the quote currency, the British Pound, of the EURGBP currency pair:
Employment Change, Unemployment Rate, Jobless Claims, Claimant Count Rate & Average Weekly Earnings:
• Expectations: Employment gain of 270,000, unemployment rate of 6.4%, jobless claims contraction of 30,000, claimant count rate of 3.0%, average weekly earnings contraction of 0.1% and average weekly earnings excluding bonuses gain of 0.7%
• Previous Month’s Data: Employment gain of 254,000, unemployment rate of 6.5%, jobless claims contraction of 36,300, claimant count rate of 3.1%, average weekly earnings increase of 0.3% and average weekly earnings excluding bonuses gain of 0.7%
• Impact on British Pound: The contraction in average weekly earnings is likely to overshadow the overall data unless employment gains will deliver a significant surprise; this report could pressure the British Pound to the downside and favor binary call options