EUR/GBP: Stuck In A Sideways Trend
GOption | Aug 25, 2014 07:58AM ET
Today’s Binary Options Trading Strategy:
• Currency Pair: EUR/GBP
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary call options on dips below 0.7975
• Upside Potential: The upside potential for this binary call option is 60 pips to 0.8035
• Downside Potential: The downside potential for this binary call option is 15 pips to 0.7960
The EUR/GBP has been stuck in a sideways trend with a bullish bias after a reversal rally emerged on July 30th 2014. The reversal rally formed after the EUR/GBP reached an intra-day low of 0.7874 on July 23rd 2014. The preceding correction was initiated after this currency pair reached an intra-day high of 0.8310 on April 11th 2014. The current bullish bias can be attributed to a series of lower lows and higher highs which formed over the past few trading weeks.
The series of higher lows and higher highs has additionally formed a bullish price channel which is a bullish chart formation and suggests that the rally may resume. Binary options traders can take advantage from the expected continuation with binary call options. Today’s binary options trading strategy suggests call options to be placed below 0.7975 for a risk/reward ratio of 1.0/4.00.
The sideways trend which developed since August 1st 2014 suggests that the current technical as well as fundamental picture leaves buyers and sellers at a stalemate inside a well-defined zone between an intra-day low of 0.7970 reached on August 20th 2014 and an intra-day high of 0.8036 reached on August 14th 2014. The 0.7988 level marks an intersection point between the ascending support level of the bullish price channel and the low end of the current trending zone.
The EUR/GBP is expected to find strong support at the intersection point from where a rally higher is expected with a breakout above the 0.8036 level from where this currency pair is expected to drift higher until it reaches resistance from its ascending resistance level of its current bullish price channel. Traders should be prepared for a potential false breakdown below the 0.7970 level before the current rally may resume.
The following economic data out of the Eurozone is expected to impact the base currency, the Euro, of the EUR/GBP currency pair:
German IFO Data for August:
• Expectations: IFO Business Climate at 107.0, IFO Current Assessment at 112.0, IFO Expectations at 102.1
• Previous Month’s Data: IFO Business Climate at 108.0 in July, IFO Current Assessment at 112.9, IFO Expectations at 103.4
• Impact on Euro: Germany is the biggest economy in the Eurozone and solid numbers from the IFO report will boost the Euro which favors binary call options in the EUR/GBP
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There is no economic data out of the UK which will impact the quote currency, the British Pound, of the EUR/GBP currency pair due to a holiday which will allow for price action to move free of interruptions when it comes to the quote currency. This favors binary call options in the EUR/GBP currency pair given the bullish chart formation as well as intersection point of two major support levels.
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