October 10th 2014 4:47am GMT, London UK
Today’s Binary Options Trading Strategy:
• Currency Pair: GBPUSD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 1.6120
• Upside Potential: The upside potential for this binary call option is 380 pips to 1.6500
• Downside Potential: The downside potential for this binary call option is 120 pips to 1.6000
The GBPUSD has experienced an increase in volatility and pulled back from its most recent intra-day high of 1.6524 which it reached on September 19th 2014 as worries about monetary policy out of the Bank of England have resurfaced. The correction did reach an intra-day low of 1.5952 which it reached on October 3rd 2014. The move lower has dropped the GBPUSD into a horizontal support level which is intersected by an ascending support line.
Price action is expected to use this double support level as a platform to halt the current move lower and rally back until it reaches its intra-day high from September 19th 2014 where a double top formation may develop. Binary options traders can profit from the expected move higher with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 1.6120 for a risk/reward ratio of 1.0/3.17.
The increase in volatility is likely to persist as the GBPUSD is trapped inside a triangle formation at is horizontal support level. The descending resistance line is expected to favor sellers who will attempt to force a breakdown and continue the move lower. The ascending support line will assist buyers to force a breakout and reverse losses. Buying pressure is expected to be greater than selling pressure which favors binary call options in the GBPUSD currency pair. Any temporary breakdown below the ascending support line should be taken as a better entry opportunity into this trade.
The first resistance level for the expected breakout awaits the GBPUSD at the 1.6150 level which is where the descending resistance line and ascending support line intersect. Price action is expected to drift into this level before attempting its breakout. The next resistance level is located at 1.6287 which is an intra-day low reached on September 22nd 2014 and previously halted a move lower. A breakout above this level will take the GBPUSD to the 1.6413 level which is an intra-day high reached on September 24th 2014 prior to the accelerated move lower while the final resistance level awaits this currency pair at its intra-day high of 1.6524.
The following economic data out of the United Kingdom is expected to impact the the base currency, the British Pound, of the GBPUSD currency pair:
Trade Balance Data for the month of August:
• Expectations: A total trade deficit of £3,000 million, non-EU trade deficit of £4,000 million
• Previous Report’s Data: A total trade deficit of £3,348 million was reported in July, non-EU trade deficit of £4,345 million
• Impact on the British Pound: A decrease in the trade deficit is expected to push the British Pound higher which favors binary call options in the GBPUSD currency pair
In addition the following economic report out of the United States is expected to impact the quote currency, the US Dollar, of the GBPUSD currency pair:
Import Price Index for the month of September:
• Expectations: A monthly contraction of 0.7%, an annualized contraction of 1.3%
• Previous Report’s Data: A monthly contraction of 0.9% was reported in August, an annualized contraction of 0.4%
• Impact on the US Dollar: The accelerated contraction in the import price index is likely to exercise downward pressure on the US Dollar; this favors binary call options in the GBPUSD currency pair