December 4, 2014 6:38am GMT, London UK
Today’s Binary Options Trading Strategy:
• Currency Pair: EURGBP
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 0.7850
• Upside Potential: The upside potential for this binary call option is 180 pips to 0.8030
• Downside Potential: The downside potential for this binary call option is 50 pips to 0.7800
The EURGBP has experienced a prolonged corrective phase after recording an intra-day high of 0.8038 on November 19th 2014. A series of economic disappointments has applied downward pressure on the Euro while a set of positive economic reports have boosted the British Pound. This has created a double tailwind for this currency pair which allowed for the accelerated move to the downside. Prior to the corrective move the EURGBP did rally from an intra-day low of 0.7802 which it reached on November 12th 2014. The corrective phase recorded an intra-day low of 0.7832 yesterday on December 3rd 2014 which marked a higher low.
Price action is now trying to find stability inside its horizontal support zone which is being enforced by its ascending support level. The EURGBP is expected to halt the move to the downside and attempt a breakout in order to challenge its most recent intra-day high. Binary options traders can profit from the expected breakout with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 0.7850 for a risk/reward ratio of 1.0/3.60.
The EURGBP is likely to witness an increase in volatility, which has been contained during the orderly move to the downside, as buyers and sellers square off at a crucial support area. Sellers are expected to use the current downward momentum in order to force a breakout below its horizontal support area and extend the move to the downside. Buyers are anticipated to attempt a price action reversal by halting the move lower at its merged horizontal support area in order to force the EURGBP back to the upside.
The first resistance level awaits the EURGBP at its intra-day low of 0.7897 which was reached on November 26th 2014. This level has previously halted a move to the downside and pushed this currency pair back into its descending resistance level. A breakout above this level will take the EURGBP to its intra-day high of 0.7977 which was reached on December 1st 2014. This level marked the last time this currency pair touched its descending resistance level. The final resistance level is located at its intra-day high of 0.8038 which was reached on November 19th 2014.
The following economic data out of the Eurozone is expected to impact the base currency, the Euro, of the EURGBP currency pair:
European Central Bank Rate Announcement:
• Expectations: Interest rate at 0.05%, marginal lending facility rate at 0.30% and deposit facility rate at -0.20%
• Previous Rate Announcement: Interest rate at 0.05%, marginal lending facility rate at 0.30% and deposit facility rate at -0.20%
• Impact on the Euro: The European Central Bank is not expected to act on rates and unlikely to provide new data to support a weaker Euro; 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:
Bank of England Rate Announcement:
• Expectations: Interest rate at 0.50%, Asset Purchase Target at £375 billion
• Previous Rate Announcement: Interest rate at 0.50%, Asset Purchase Target at £375 billion
• Impact on the British Pound: The Bank of England is expected to disappoint and apply downward pressure on the British Pound which favors binary call options in the EURGBP currency pair