January 5th, 2015 5:19am 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 1.5300
• Upside Potential: The upside potential for this binary call option is 475 pips to 1.5775
• Downside Potential: The downside potential for this binary call option is 170 pips to 1.5130
The GBPUSD was slammed with a wave of selling pressure during the first trading day of 2015 and experienced a sharp move to the downside which continued during the Asian trading session this morning. The current corrective phase has an intra-day high of 1.5786 which was reached on December 16th 2014 while today’s corrective stance printed an intra-day low of 1.5132. The move lower did form a falling wedge formation which is a bullish chart pattern. The GBPUSD snapped back after recording its capitulation low and is now trading back inside its falling wedge formation.
Price action is currently trading near the descending support level of its falling wedge formation from where stability is starting to emerge. The GBPUSD is expected to trend sideways inside its wide falling wedge formation until downward pressure is abating and a reversal can develop. Binary options traders can take advantage from the anticipated reversal with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 1.5300 for a risk/reward ratio of 1.0/2.79.
Volatility has decreased during the move to the downside as the falling wedge formation formed, but is expected to increase as the GBPUSD is trading near its descending support level. Sellers are anticipated to attempt a breakdown below the bullish chart formation in order to extend the move to the downside which is unlikely to be sustained as witnessed this morning. Buyers are favored to take the falling wedge formation as a platform to drift to the upside until a breakout can accelerate the GBPUSD to the upside and challenge its horizontal resistance level.
The GBPUSD will face its first resistance level at its intra-day low of 1.5486 which was reached on December 23rd 2014 and is also where the descending resistance level will meet price action. This level has previously halted the move to the downside and pushed the GBPUSD back into its descending resistance level. A breakout above this level will take the GBPUSD to its intra-day high of 1.5620 which was reached on December 31st 2014. This level marked the previous high of a drift to the upside before the GBPUSD accelerated to its current intra-day low. The final resistance level awaits the GBPUSD at its intra-day high of 1.5786 which was reached on December 16th 2014.
The following economic data out of the United Kingdom is expected to impact the base currency, the British Pound, of the GBPUSD currency pair:
Construction PMI for the month of December:
• Expectations: A reading of 59.0 is expected for the month of December
• Previous Report’s Data: A reading of 59.4 was reported in the month of November
• Impact on the British Pound: The anticipated seasonal slowdown in the Construction PMI out of the UK is likely to be overshadowed by economic data released out of the US; this 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:
New York ISM Manufacturing Index for the month of December:
• Expectations: A reading of 61.1 is expected for the month of December
• Previous Report’s Data: A reading of 62.4 was reported in the month of November
• Impact on the US Dollar: The expected slowdown in the New York ISM Manufacturing Index may suffice to pressure the US Dollar to the downside which favors binary call options in the GBPUSD currency pair