› Weekly binary options technical forecast February 3 - 7

Weekly binary options technical forecast February 3 - 7

GBP/USD: Bullish

The British pound was one of the four major currencies gaining strength versus the greenback this past week. Call options for GBP/USD were in demand despite the plunge of the British stock index FTSE 100, which reflected the general sell-off in the global equity market. Although the fundamental environment was not in favour of the British currency, Sterling gained strength versus the greenback. A huge cash flow from high-yield asset classes and high-risk currencies back to safety created an unprecedented demand for call options for pound cross-rates. Such currency pairs as GBP/AUD, GBP/NZD and GBP/CAD were the most lucrative assets to trade in the binary options market with a one-way price action. However, before analysing some of them, we should have an in-depth technical overview of the major GBP/USD currency pair to make the weekly forecast.

Looking at the daily chart below, a binary options trader could assume that nothing crucial happened in terms of the technical analysis. GBP/USD is still in consolidation mode with several local peaks and bottoms, the recent horizontal resistance level is not breached yet and there are no reasons for long-term conclusions about a possible trend direction. However, several preliminary technical signs might have an essential meaning for an explosive price action in the near future.

First, GDB/USD went off the Ichimoku cloud for the first time since January 17. Second, the bearish action was limited by the bottom band of the cloud (green arrow). Third, Stochastic RSI performed a bullish crossover in the middle of the range without entering into the oversold zone. All those factors could signal that the consolidation and retracement are over and the recent strong uptrend is about to resume.

Weekly binary options technical forecast February 3 - 7

GBP/AUD: Extremely bullish

Below is a daily chart of the GBP/AUD currency pair with a similar technical setup but entirely different performance. The bullish momentum is much higher in this case as the overall number of traders interested in purchasing call options for GBP/AUD exceeds the average. As a result, the exchange rate breached several technical resistance levels and accelerated the uptrend towards a magnetic target of 2 AU dollars per pound.

Weekly binary options technical forecast February 3 - 7

Such a sharp one-way price action influences extremely lucrative trading cycles of buying call options on shorter timeframes. For instance, the 15-minutes chart below shows at least three trading cycles when the number of candlesticks in the green was reaching 90% within quite a long period, so traders could have maximized profits from buying call options consequently.

The most effective technical tools to monitor for such a trading approach are fast and sensitive oscillators such as Stochastic RSI and Williams %R. Although both tools were reaching extremely high values in the overbought zone, the uptrend used to continue moving in the previous direction until first reversal signs occurred. Stochastic RSI had bearish crossovers in overbought territory, while Williams %R was confirming signals to stop buying put options when its line was crossing the threshold from above. Both indicators also reflected the upside pressure, pointing to moments to resume buying call options. The medium-term technical analysis suggests that the same scenario is going to take place in the week ahead, so binary options traders could repeat lucrative trading cycles.

Weekly binary options technical forecast February 3 - 7

USD/CHF: Bearish

The U.S. dollar has finished the bullish correction versus the Swiss Franc, renewing the long-term downtrend. The four-hourly chart setup below clearly shows that the bears are back to control the market with heavy-volume demand for put options. Williams Alligator reversed back into the bearish eating mode as all three lines are placed in the correct order to proceed with the downtrend. On top of that, the exchange rate went back into the descending channel, breaching the former resistance now support line (dashed blue). Put-option buyers were active enough to extend the bearish achievement, re-testing the local low at 0.9631 registered on January 16.

The Average Directional Index has even more pessimistic sentiment for the USD/CHF currency pair. The mainline reflected the overall growth of the bearish momentum by edging higher towards the threshold. A continuation of put-option buyers’ activity could lead to the breakout of the threshold, meaning the lack of call-option buyers’ ability to resist the freefall of the exchange rate. The growing negative surplus between the DI+ and DI- lines is highlighted with the red colour and the indicator has more room to go in the same direction before reaching a similar peak as it’s been noticed in mid-January. Therefore, binary options traders should seek attractive opportunities to resume buying put options for USD/CHF with 4-hours expiration time.

Weekly binary options technical forecast February 3 - 7

CAD/JPY: Extremely bearish

The Canadian dollar is also in danger of losing the ground versus the Japanese yen. The four-hourly chart below shows that put-options buyers are extremely active in terms of pushing the CAD/JPY exchange rate towards the double horizontal bottom noticed in November and December 2019. Bollinger bands indicator points to a strong bearish momentum as prices stick around the bottom line, breaching it quite often. Awesome oscillator extended its negative surprise of the histogram coming back to the growing pressure caused by sustainable demand for put options.

The best trading approach for the week ahead is to catch a counter-trend action towards the Bollinger bands middle line, which acts as the technical resistance to limit the bullish activity. Those rebounds to be used together with reversal bearish signals to start buying put options again. The expiration time could be shortened to 15-, 30- and 60-minutes charts, according to active trading hours during Asian and North American trading sessions.

Weekly binary options technical forecast February 3 - 7

USD/ZAR: Bullish

In contrast to major currencies, the emerging market was crashed versus the US dollar in the past week is global investors were running out of high-risk assets back to safety. One of the most attractive currency pairs to trade on that capital flow was USD/ZAR, which gained more than 600 pips according to four-digit quotes. The four-hourly chart below highlights two stages of the bullish reversal pattern and an upside acceleration during the past week. The 89-bars simple moving average acted as the support curve, signalling the beginning of the call-option cycle after two failed tests from the upside. Trading signals highlighted by green arrows were coming together is buy-signals from the Bull Bear Trend indicator when its value was crossing the 0 line. The relative strength index confirmed the sustainable demand for call options when the indicator crossed the middle threshold from below. Although RSI entered into the overbought territory, the upside risk still persists, so traders should continue buying call options is a medium-term perspective.

Weekly binary options technical forecast February 3 - 7

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