February 2nd, 2015 5:04am GMT, London UK Today’s Binary Options Trading Strategy:• Currency Pair: GBPUSD
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary put options on rallies above 1.5150
• Downside Potential: The downside potential for this binary put option is 200 pips to 1.4950
• Upside Potential: The upside potential for this binary put option is 120 pips to 1.5270The GBPUSD has spiked sharply higher during the previous trading session. The move higher was supported by its ascending support level which was formed as a result of a higher low inside its horizontal support level. The sharp advance was halted by its descending resistance level which intersected its horizontal resistance level. An increase in downward pressure is likely to accelerate at this enforced resistance level which is expected to pressure this currency pair into a reversal.
Price action is now trading just beneath its horizontal resistance level and the GBPUSD may attempt to challenge this level once again. The GBPUSD is anticipated to reverse its sharp spike to the upside until it will reach its ascending support level. Binary options traders can take advantage from the expected price action reversal with binary put options. Today’s binary options trading strategy suggests put options to be placed on rallies above 1.5150 for a risk/reward ratio of 1.0/1.67.
The GBPUSD saw a minor increase in volatility during its spike and volatility is expected to increase further as buyers and sellers are set to battle around current levels. Buyers may attempt to increase the recent move to the upside with a breakout above its double resistance level; the descending resistance level has intersected its horizontal resistance level. A potential breakout is expected to be limited to its most recent intra-day high of 1.5269. Sellers will take the same enforced resistance level in order to pressure the GBPUSD into a price action reversal. This favors binary put options in the GBPUSD currency pair.
Given the sharp spike there is only one support level between the current price and its ascending support level. In addition the ascending support level and the descending resistance level have formed a wide triangle formation which is increasing pressures for a sustainable move. The first support level awaits the GBPUSD at its intra-day low of 1.5057 which was reached on January 20th 2015. A breakdown below this level will take the GBPUSD to its ascending support level around the 1.5020 mark. The final resistance level is located at its intra-day low of 1.4951 which was recorded on January 23rd 2015.
The following economic data out of the United Kingdom is expected to impact the base currency, the British Pound, of the GBPUSD currency pair:
Markit/CIPS Composite PMI & Services PMI for the month of January:
• Expectations: A level of 55.5 in the month of January is expected for the Markit/CIPS Composite PMI, a level of 56.3 in the Markit/CIPS Services PMI
• Previous Report’s Data: A level of 55.2 was reported in the month of December for the Markit/CIPS Composite PMI, a level of 55.8 in the Markit/CIPS Services PMI
• Impact on the British Pound: The anticipated increase in the Markit/CIPS Composite PMI as well as the Markit/CIPS Services PMI may not suffice to pressure the British Pound to the upside which favors binary put 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:
ADP Employment Change for the month of January:
• Expectations: An increase of 220,000 is expected for the month of January
• Previous Report’s Data: An increase of 241,000 was reported for the month of January
• Impact on the US Dollar: The expected increase above 200,000 in the ADP report is likely to pressure the US Dollar to the upside; this favors binary put options in the GBPUSD currency pair