November 19th 2014 5:12am GMT, London UK
Today’s Binary Options Trading Strategy:
• Currency Pair: GBPCHF
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 1.4980
• Upside Potential: The upside potential for this binary call option is 330 pips to 1.5310
• Downside Potential: The downside potential for this binary call option is 130 pips to 1.4850
The GBPCHF has corrected sharply over the past five trading days as the British Pound came under pressure after the Bank of England’s inflation reports cited concerns that inflation may decrease down to 1.0% which would mean that the British central bank may refrain from raising interest rates longer than expected. Prior to the fundamental shock the GBPCHF has rallied from an intra-day low of 1.4992 which it reached on October 15th 2014 to an intra-day high of 1.5447 which was reached on November 6th 2014.
Price action accelerated to the downside until a sharp bounce shook off most of the downward momentum which was followed by an extended drift lower.
The GBPCHF is currently in the process of carving out a new horizontal support level from where a move to the upside may emerge. Binary options traders can benefit from the anticipated move higher with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 1.4980 for a risk/reward ratio of 1.0/2.54.
Volatility has increased together with the move to the downside and is expected to remain at elevated levels as buyers and sellers face off around the key 1.5000, plus/minus 50 pips, psychological support/resistance level.
Sellers are expected to take the current move to the downside and increase negative pressures for a sustained breakdown below the 1.5000 mark in order to extend the downtrend. Buyers are anticipated to use the formation of the new horizontal support level as a solid platform combined with the 1.5000 mark to fully halt the move lower and reverse back to the upside until it reaches its descending resistance level around the 1.5310 mark.
The GBPCHF will face its first resistance test at its intra-day high of 1.5103 which was reached on November 17th 2014 and marked the high of the bounce to the upside. A successful breakout above this level will take the GBPCHF to its intra-day low of 1.5223 which was reached on October 29th 2014 from where the push to its most recent intra-day high emerged.
The final resistance level for the expected move higher awaits the GBPCHF at its descending resistance level around the 1.5310 mark.
The following economic data out of the United Kingdom is expected to impact the base currency, the British Pound, of the GBPCHF currency pair:
Bank of England Minutes:
• Expectations: The Bank of England has opted to keep interest rates on hold at 0.50% and did not reduce its Asset Purchase Target which currently stands at £375 billion. A split in the votes for action against inaction as well as the reduction of the APT before an increase in interest rates may be part of the minutes from the latest meeting
• Impact on the British Pound: Should a split in the votes and an increase amongst those in favor to act be reported, the British Pound is expected to move sharply higher; this favors binary call options in the GBPCHF currency pair
In addition the following economic report out of Switzerland is expected to impact the quote currency, the Swiss Franc, of the GBPCHF currency pair:
ZWE Survey for the month of November:
• Expectations: A monthly reading of -32.0 is expected for the month of November
• Previous Report’s Data: A monthly reading of -30.7 was reported in October
• Impact on the Swiss Franc: The anticipated negative reading out of the Swiss ZEW Survey is likely to pressure the Swiss Franc lower which favors binary call options in the GBPCHF currency pair.