Market Analysis for Binary Options – Trade of the Week: GBP/CHF 30th March 2015

Switzerland – KOF Economic Barometer

At GMT 7:00 a.m., the KOF Economic Research Agency released its economic barometer reading, which measures the level of a composite index by combining the index reading of 219 other economic indicators, including banking confidence, production levels, new orders, consumer confidence level, overall money supply, interest rate spreads, housing statistics, and foreign exchange rate.

Since the KOF economic barometer is an index made out of a wide range of other economic indicators, binary options traders and market analysts consider this to be an important leading indicator of the overall Swiss economy.

In February, the KOF economic barometer index reading came out at 90.3 and the forecast for March was set at 89.3. However, the actual index reading came out better than what the market was expecting, at 90.8.

United Kingdom – Net Lending to Individuals

Later in the morning, at GMT 8:30 a.m., the Bank of England released the month-over-month net lending to individuals figure, which measures the changes in the total value of new loans issued to consumers in the UK over the past month.

Net lending to consumers is directly correlated to the consumer spending. Moreover, it can also indicate the consumer confidence because of the positive cash flow effects of the credit issued to individuals. Also, consumers only take out loans when they are confident about their future earning potential. Hence, binary options traders consider the UK’s net lending to individuals figure to be a leading indicator of the overall economy as consumer spending profoundly contributes to the GDP growth of the country.

Last month, in February, the UK’s net lending to individuals figure came out at 2.4 billion and the forecast for this month was set at a slightly improved figure of 2.5 billion. The actual figure matched the market’s expectation and came out at 2.5 billion.

Trade Recommendation for the GBP/CHF

Chart GBPCHF, D1, 2015.03.30 11:51 UTC

Since the GBP/CHF broke below the support level around 1.4940 on January 15, it retraced in a steady manner and formed a well-respected upward sloping trend line. However, on March 17, the GBP/CHF price managed to close below the trend line and currently trading around the 1.4206 level, which is the 38.2% Fibonacci retracement level of the previous upward swing.

Although the trend line is broken, the GBP/CHF has found sufficient support around the key historical pivot zone around 1.4200. However, as the KOF economic barometer reading came out  better than expected, there would be additional bearish pressure on the GBP/CHF price in the coming few days.

If the GBP/CHF price closes below the 1.4200 level on the daily time frame, it would likely find further bearish momentum. In that situation, once the price closes below the support around 1.4200 level, it is recommended that binary options traders consider placing a PUT order with the GBP/CHF.

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About our Forex Analyst:  Asif Imtiaz

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