EUR/GBP Binary Call Option – December 19th 2014
GOption | Dec 19, 2014 04:43AM ET
• Currency Pair: EUR/GBP
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 0.7850
• Upside Potential: The upside potential for this binary call option is 125 pips to 0.7975
• Downside Potential: The downside potential for this binary call option is 75 pips to 0.7775
The EUR/GBP has experienced a sharp move to the downside after recording an intra-day high of 0.8006 on December 16th 2014. This intra-day high marked a false breakout above its horizontal resistance level and was quickly reversed. This level was reached after a strong move to the upside formed from its intra-day low of 0.7832 which was recorded on December 3rd 2014. The sharp move to the downside has now reached an intra-day low of 0.7836 yesterday on December 18th 2014. This marked a higher low and the EUR/GBP is expected to launch a price action reversal from its double bottom formation.
Price action is currently trading inside its horizontal support level where selling pressure is being deflated. The EUR/GBP is expected to gather enough upward momentum for a breakout which will lead to an advance until it will challenge its most recent intra-day high. Binary options traders can take advantage from the expected breakout with binary call options. Today’s binary options trading strategy suggests call options to be placed on dips below 0.7850 for a risk/reward ratio of 1.0/1.67.
The EUR/GBP saw an increase in volatility as the accelerated move to the downside developed once the false breakout, with an intra-day high of 0.8006 reached on December 16th 2014, above its horizontal resistance level was quickly reversed. The move lower has now been halted inside its horizontal support level, but volatility is likely to remain elevated as sellers will attempt to force a breakdown and extend the downward move. Buyers are favored to take the strength of the horizontal support level and launch a breakout for a full price action reversal.
The first resistance level awaits the EUR/GBP at its intra-day low of 0.7874 which was reached on December 12th 2014. This level has previously reversed a move to the downside and pushed the EUR/GBP into its most recent intra-day high. A breakout will lead the EUR/GBP to its intra-day high of 0.7923 which was recorded on December 5th 2014. The next resistance level is located at its intra-day high of 0.7977 which was reached on December 1st 2014 from where a double top formation inside its horizontal resistance level is likely to prevent a further advance.
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The following economic data out of the Eurozone is expected to impact the base currency, the Euro, of the EUR/GBP currency pair:
German GfK Consumer Confidence Survey for the month of January:
• Expectations: A reading of 8.8 is expected for the month of January
• Previous Report’s Data: A reading of 8.7 was reported in the month of December
• Impact on the Euro: The expected increase in consumer confidence out of Germany, the largest economy in the Eurozone, is likely to pressure the Euro higher; this favors binary call options in the EURGBP currency pair
In addition the following economic report out of the United Kingdom is expected to impact the quote currency, the British Pound, of the EUR/GBP currency pair:
Public Sector Net Borrowing for the month of November:
• Expectations: Public Sector Net Borrowing of £14.8 billion is expected for the month of November
• Previous Report’s Data: Public Sector Net Borrowing of £7.1 billion was reported in the month of October
• Impact on the British Pound: The anticipated increase in Public Sector Net Borrowing is expected to pressure the British Pound to the downside which favors binary call options in the EUR/GBP currency pair.
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