The pair failed to sustain gains and dropped out of the yellow consolidation range (see the four-hourly chart below), accelerating the bearish trade throughout the past week. Put options were in demand for EUR/USD since August 13 when the bulls failed to lift the pair above 1.1230 resistance. As a result, a new downtrend started. The overall descending formation has a continuation sign as the median line (dashed green) is headed south with more room to go before the support reached. The lowest rate of 1.10269 is the baseline of the recent action, and if the buyers of put options were able to push the rate below it, then a bearish breakout would be in play with a possible acceleration towards the parity between the Euro and the U.S. dollar. This Monday’s bullish spike gives an attractive opportunity to start buying put options with a 4-hours expiration time, while shorter timeframes have to be monitored for intraday signals. The nearest defensive barrier for the bulls comes at around 1.1060/70 as the median line might trigger some postponed buy-orders for call options. On the other hand, the performance near that threshold should clarify further trend’s direction. If the bulls were able to defend that support level, then a deeper retracement would take place with a potential re-test of 1.1200 figure. Otherwise, the downtrend would resume.
GBP/USD: Bullish retracement
The British Pound was the strongest currency among majors this past week ass binary options traders were buying call options for the currency versus the U.S. dollar and Euro. As a result, a local bottom at 1.2045 has been found, and GBP/USD retraced back to 1.2150 resistance, adding almost 1% to the exchange rate for the first time in five weeks. A four-hourly Bollinger Bands indicator turned positive with a possible sign of bullish continuation as two breakthrough signals were charted on August 15 and 16 with a squeeze of the range, which could signal lower volatility. The indicator headed north, while the exchange rate holds above the Bollinger Band middle line, which should confirm further bullish activity for the week ahead. Binary options traders could consider buying call options for GBP/USD on downside whipsaws towards the middle line, which should act as the support until breached. On the other hand, the resistance level of 1.2200 could be a tough nut to crack for call-option buyers, and the pair could reverse back to the downtrend around that level. Therefore, binary options traders should watch the daily performance carefully.
EUR/GBP: Bearish engulfing
The recent price action might point to a bearish reversal as the weekly candlestick has a sign of engulfing, while the close rate is much lower than the open rate from the previous week. The overall loss for the cross-rate exceeded 2%, which is quite unusual for such a slow-moving currency pair. The four-hourly chart below has a clear trading signal to start buying put options on Monday, August 12 due to several technical indicators reversing the sentiment. First, Parabolic SAR dots had jumped above the price, signalling a change in the trend. Second, both Commodity Channel Index and Williams %R oscillator went out of the oversold territory, pointing to the weakening bullish momentum. However, that bearish action might have come to an end as the opposite signal occurred last Friday. Therefore, EUR/GBP could have a consolidation period before a new trend started. Put options are preferable in the medium-term perspective though.
GOLD: bullish continuation
The yellow metal continued climbing north this past week, and the recent top was renewed. The highest weekly price was noticed at $1535 per ounce, while put-options buyers stepped in at that level as the gold price was attractive for a reversal. On the other hand, the bottom of $1480 per ounce was cheap enough to attract buyers of call options, and the weekly close was noticed at $1513 per ounce. Nonetheless, the current trading week started with put-options dominance and the price could re-test the recent bottom once again. The price of gold was testing the upper band of the Ichimoku Cloud at the time of writing, and if the buyers of put options continued weighing on the market, the rate would enter the cloud, signalling an uncertainty period. However, the leading span is still bullish and both Ichimoku lines did not enter the span yet, which should be used by binary options traders to continue buying call options with 4-hours expiration time. Long-Term support is coming at $1455 per ounce as the recent price action was rather sharp and quick. Therefore, a deeper rebound is still possible before the uptrend renewed.
USD/CAD: The bulls lose momentum
Although the price action was in favour of the call-options scenario, the bulls failed to hold gains above 1.3300, and USD/CAD was sliding back to 1.3200 figure several times this past week. As a result, the weekly gain was insignificant, and the weekly candlestick had long shadows on both sides, which should point to uncertainty or consolidation, if not a bearish reversal. USD/CAD charted lower highs this past week, and the exchange rate is on its way to test the ascending support trendline, which used to limit losses since July 18. If the buyers of put options were strong enough to breach that support level, then the overall ascending formation would come to a reversal point. Another confirmation comes from triple exponential moving average with the period of 13-, 21- and 34-bars. The rate is clearly below the indicator, while the upper curve is about to cross the middle line, which might signal that put options are going to dominate in the near future. The horizontal static support of 1.3200 should show how strong the bears currently are.