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GBPUSD – AUGUST 19TH 2014

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By: Adam Stone
August 19th 2014 6:31am GMT, London UK
 
Today’s Binary Options Trading Strategy:

• Currency Pair: GBPUSD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek call options on dips below 1.6725
• Upside Potential: The upside potential for this call option is 370 pips to 1.7095
• Downside Potential: The downside potential for this call option is 140 pips to 1.6585

The GBPUSD has broken out of its falling wedge formation and is currently drifting higher. The breakout occurred yesterday on August 18th 2014 and is expected to gain momentum. The preceding sell-off took this currency pair from an intra-day high of 1.7191 reached on July 15th 2014 to an intra-day low of 1.6657 reached on August 14th 2014.

GBPUSD

Price action is expected to face choppy trading with increased volatility while volume is additionally expected to increase as the breakout rally will gain momentum. Binary options traders can take advantage from the expected acceleration with binary call options. Today’s binary options trading strategy suggests call options to be placed below 1.6725 for a risk/reward ratio of 1.0/2.64.
Today’s inflation data out of the United Kingdom as well as the Unites States is expected to provide the catalyst for the current breakout to increase in volume which will push the GBPUSD higher. This currency pair is mounting the rally from extremely depressed levels and a solid bullish chart pattern in the form of a falling wedge formation. The breakout which occurred yesterday was confirmed and price action may attempt one final push lower before accelerating to the upside.

The expected rally will face its first resistance level at 1.6757 which is an intra-day low reached on August 12th 2014 prior to the capitulation sell-off. A breakout above this mark will take this currency pair to 1.6845 which is an intra-day high reached on August 13th 2014 before economic fata pushed the GBPUSD lower. The next resistance level awaits this currency pair at 1.6888 which is an intra-day high reached on August 5th 2014 when this currency pair launched a failed rally. A successful breakout should clear the way to the psychological barrier of 1.7000 and beyond.

The following economic data out of the United Kingdom is expected to impact the base currency, the British Pound, of the GBPUSD currency pair:

Consumer Price Index for July:

• Expectations: Monthly contraction of 0.2%, annualized increase of 1.8%, annualized core increase of 1.9%
• Previous Month’s Data: Monthly increase of 0.2% in June, annualized increase of 1.9%, annualized core increase of 2.0%
• Impact on British Pound: A better than expected reading on consumer inflation is expected to boost the British Pound which favors binary call options in the GBPUSD currency pair

Producer Price Index for July:

• Expectations: Monthly contraction of 1.0% for the PPI Input Index, annualized contraction of 6.4%, monthly increase of 0.1% for the PPI Output Index, annualized reading of 0.0%, monthly reading of 0.0% for the core PPI Output Index, annualized increase of 0.9%
• Previous Month’s Data: Monthly contraction of 0.8% in June for the PPI Input Index, annualized contraction of 4.4%, monthly contraction of 0.2% for the PPI Output Index, annualized increase of 0.2%, monthly reading of 0.0% for the core PPI Output Index, annualized increase of 1.0%
• Impact on British Pound: An increase in inflation in producer prices will further rally the British Pound and strengthen the case for binary call options in the GBPUSD currency pair

In addition the following economic reports out of the US are expected to impact the quote currency, the US Dollar, of the GBPUSD currency pair:

Consumer Price Index for July:

• Expectations: Monthly increase of 0.2%, annualized increase of 2.0%, annualized core increase of 1.9%
• Previous Month’s Data: Monthly increase of 0.1% in June, annualized increase of 2.1%, annualized core increase of 1.9%
• Impact on US Dollar: The deceleration in inflation will likely put downward pressure on the US Dollar which favors binary call options in the GBPUSD currency pair
Housing Starts/Building Permits July:
• Expectations: Monthly increase of 8.9% in housing starts, monthly increase of 2.8% in building permits
• Previous Month’s Data: Monthly contraction of 9.3% in housing starts in June, monthly contraction of 3.2% in building permits
• Impact on US Dollar: Despite the expected rebound over the past two months the US housing sector has been contracting which is a bearish factor for the US Dollar and therefore favors binary call options in the GBPUSD currency pair

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Adam Stone
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Adam Stone

As COO of GOptions, my first and foremost goal is to provide traders with the most up to date info from the markets. I have been trading the markets since 2004 and have been involved with stocks, binary options, and forex trading since then. I have had no formal market education and pride myself on a self taught approach to everything related to trading. I try to focus though on both the technical and fundamental aspects related to each trading day and bring forward the most important aspects of risk/reward in the market.
Adam Stone
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