May 25th, 2015 5:08 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 0.7100
• Upside Potential: The upside potential for this binary call option is 380 pips to 0.7480
• Downside Potential: The downside potential for this binary call option is 100 pips to 0.7000
The EURGBP is nearing the end of its corrective move which took this currency pair from its intra-day high of 0.7483 recorded on May 7th 2015 to its intra-day low of 0.7089 reached today on May 25th 2015. The current intra-day low represents a lower low as compared to its previous intra-day low of 0.7123 which was recorded on May 13th 2015. Downward momentum came to a halt as the EURGBP reached its horizontal support level. At first look, recent price movements could appear random and traders may wonder about option trading secrets. There are no secrets, just a solid analysis and market understanding in order to achieve consistent profitability.
Price action is now trading inside of its horizontal support level where downward momentum is being depleted. The EURGBP is anticipated to stabilize and potentially enter a sideways trend until enough upward momentum has accumulated for a breakout. Binary options traders can take advantage 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 0.7100 for a risk/reward ratio of 1.0/3.80.
The EURGBP was exposed to a contraction in volatility which accompanied the move to the downside, but an increase in volatility is anticipated as buyers and sellers are expected to test its current support level over the next few trading sessions. Sellers may attempt to extend its corrective phase with a breakdown below its horizontal support level, but any further move to the downside is not expected to materialize. Buyers are favored to force a full price action reversal and take the EURGBP back into its horizontal resistance level where it can challenge its intra-day high.
The first resistance awaits the EURGBP at its intra-day high of 0.7163 which was reached on May 22nd 2015 from where a breakout will clear the way to its next resistance level at its intra-day high of 0.7283 recorded on May 18th 2015. This level represents the intra-day high between its two intra-day lows from where price action accelerated to the downside. A further breakout will take the EURGBP to its intra-day high of 0.7419 which was reached on May 1st 2015. The final resistance level is located at its intra-day high of 0.7483 recorded on May 7th 2015 from where a double top formation may emerge.
The following economic data out of the Eurozone is expected to impact the base currency, the Euro, of the EURGBP currency pair:
German Import Price Index for the month of April:
• Expectations: A monthly increase of 1.2% is expected for April, an annualized contraction of 0.7%
• Previous Report’s Data: A monthly increase of 1.0% was reported in March, an annualized contraction of 1.4%
• Impact on the Euro: The anticipated monthly increase in the German Import Price Index is likely to apply upward pressure on the Euro; this favors binary call options in the EURGBP currency pair
There are no economic reports out of the United Kingdom which are expected to impact the quote currency, the British Pound, of the EURGBP currency pair:
The British Pound will be dictated by technical factors during today’s trading session:
• Expectations: Price action is trading inside of its horizontal support level after a strong advance in the British Pound which forced the EURGBP to the downside, but a reversal is favored
• Impact on the British Pound: The expected reversal is likely to pressure the British Pound to the downside which favors binary call options in the EURGBP currency pair