Binary Options Analysis – Trade of the Week: GBP/USD 23rd March 2015

United Kingdom – CBI Industrial Order Expectations

At GMT 11:00 a.m., the Confederation of British Industry (CBI) will release its industrial order expectation index reading, which basically measures the level of a diffusion index by surveying 550 manufacturers in the country.

Since businesses are the first to react to changing market conditions, any significant change in their industrial order expectations can act as an important indicator about the future economic activities in the country. For example, corporate spending, job creation, and capital investments. Hence, binary options traders consider the CBI industrial order expectations index to be a leading indicator of the overall British economy.

Last month, in February, the CBI industrial order expectations index reading came out at 10 and the forecast for this month is set at a slightly reduced figure, at 9.

United States – Existing Home Sales

Later in the afternoon, at GMT 2:00 p.m., the US National Association of Realtors will release the existing home sales figure, which measures the annualized number of residential buildings that were being sold in the last month. However, this figure excludes any new constructions.

The sale of an existing home can create a positive effect in the local economy as often a mortgage is taken to buy the house. Furthermore, home renovations and the purchase of other goods and services from the local area contribute to the GDP. Therefore, binary options traders consider the existing home sales figure as another important leading indicator of the overall US economy.

In February, 4.82 million existing homes were sold in the United States and the forecast for this month is currently set at a higher figure of 4.91 million.

Trade Recommendation for the GBP/USD

Chart GBPUSD, D1, 2015.03.23 04:08 UTC

Although the GBP/USD has been in a downtrend since July 2014, it broke the downward sloping trend line on February 5, 2015. However, the upward movement was limited by the resistance level around 1.5600 and during last month, it resumed the downtrend.

The continued strength of the US economy may prompt the US Federal Reserve to hike its overnight interest rate by the second quarter of 2015. Such optimistic expectations also played a vital role in adding further bearish momentum on the GBP/USD price. Subsequently, on March 11, the GBP/USD price broke below the support level around 1.4550, and last week, it reached the 161.8% Fibonacci extension level of the previous upward swing, at 1.4621. Currently, the GBP/USD price is hovering around the 1.4950 level.

If the UK’s CBI industrial order expectations index comes below 10 and the US existing home sales figure comes higher than 4.91 million, and closer to 5 million, it would certainly add further bearish momentum to the GBP/USD down trend.

Once the price breaks below 1.4620, this level will act as a resistance to the price. In that situation, it is recommended that binary options traders consider placing a PUT order with the GBP/USD.

Recommended Broker: HighLow.net

About our Forex Analyst:  Asif Imtiaz

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

LinkedIn Google+ 

Asif Imtiaz

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

Leave a Reply