Today’s Binary Options Trading Strategy:
• Currency Pair: GBP/JPY
• Timeframe: H4 (Hourly Chart)
• Binary Option Trading Recommendation: Seek binary put options on rallies above 192.200
• Downside Potential: The downside potential for this binary put option is 320 pips to 189.000
• Upside Potential: The upside potential for this binary put option is 130 pips to 193.500
The GBP/JPY has retreated from its most recent intra-day high of 195.880 which was reached on June 24th 2015. This level marked a false breakout above its horizontal resistance level and created a double top formation with its previous intra-day high of 195.835 recorded on June 18th 2015. The GBP/JPY started this trading week with a gap to the downside which took this currency pair back to its horizontal resistance level from where an increase in downward momentum is expected. Binary options traders interested in put options trading can take advantage of the attractive downside in the GBP/JPY.
Price action is currently trading just below of its horizontal resistance level which is being intersected by its descending resistance level as well as by its ascending support level. The GBP/JPY is expected to complete a breakdown below its ascending support level and accelerate to the downside. Binary options traders can profit from the anticipated breakdown with binary put options. Today’s binary options trading strategy suggests put options to be placed on rallies above 192.200 for a risk/reward ratio of 1.0/2.46.
The GBP/JPY was faced with an increase in volatility which was the result of the first breakout above its horizontal resistance level. Volatility further spiked as the double top formation emerged and price action opened with a gap to the downside. Binary options traders need to be prepared for elevated volatility as the GBP/JPY is trapped inside of a triangle formation. Buyers could attempt to force a breakout above its descending resistance level in order to reverse the current drift to the downside. Sellers are favored to take the build-up in downward momentum as a platform for a breakdown below its ascending support level from where the GBP/JPY can enter a corrective phase.
The first support level for the GBP/JPY, after a successful breakdown, is located at its intra-day low of 191.361 recorded on June 29th 2015. This level represents the low of the gap to the downside. A breakdown below this level will take the GBP/JPY to its intra-day low of 189.520 which was reached on June 3rd 2015. This level marks the upper level of its horizontal support level. The final support level awaits the GBP/JPY at its intra-day low of 188.972 recorded on June 10th 2015 from where its ascending support level originates.
The following economic data out of the United Kingdom is expected to impact the base currency, the British Pound, of the GBP/JPY currency pair:
Markit Manufacturing PMI for the month of June:
• Expectations: A level of 52.5 is expected for the month of June
• Previous Report’s Data: A level of 52.0 was reported in the month of May
• Impact on the British Pound: The expected increase in the Markit Manufacturing PMI is likely to be overshadowed by economic data out of Japan which favors binary put options in the GBP/JPY currency pair
In addition the following economic report out of Japan already impacted the quote currency, the Japanese Yen, of the GBP/JPY currency pair:
Tankan Large All Industry Capex for the Second-Quarter of 2015:
• Expectations: An increase of 5.3% was expected for the second-quarter of 2015
• Previous Report’s Data: A contraction of 1.2% was reported in the first-quarter of 2015
• Released Data: An increase of 9.3% was reported for the second-quarter of 2015
• Impact on the Japanese Yen: The better-than-expected increase in the Tankan Large All Industry Capex has pressured the Japanese Yen to the upside; this favors binary put options in the GBP/JPY currency pair
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