The British pound is at a crossroad to the US dollar
We are having a look at the British pound today and boy has it been volatile in the US session. At this point in time we have no clear direction but in our forecast we will provide you with a set of circumstances that will trigger a trade once some directional conviction materializes.
The GBP/USD binary options forex pair has been trading within a range for the past couple of sessions. We have barely managed to move above 1.67 and have been hammered lower in the aftermath every single time. Today was no exception - with the latest move above the figure sellers emerged.
We would refrain to put an outright call on the moves in Sterling, however we will identify some key levels that would in our opinion trigger a trade. The first one is the most likely scenario which we favor, yet consider very risky.
If we see an hourly close below today's New York session low around 1.6640 we will buy puts to bet on an outright reversal in the recent trend on the weekly chart. Next important step it the low from yesterday that was marked at 1.65834.
Should we see the rate test that level we will buy an hourly call option, however if we see a sustained break below it on an hourly basis we reiterate buying daily puts (that doesn't invalidate the previously mentioned hourly trade idea).
In order to trigger a daily call option to be bought we would need an hourly close above 1.6730. The level around 1.6720 has been tested three times today and none of those proved to be successful - this is why we are aspiring to the idea that a break to the downside is a little bit more likely.
In order to maintain exposure minimal we advise you to put a reasonable amount if risk in these options. Stay tuned for more forex forecasts as the weeks unfolds.