Binary options on gold traded moderately lower on Tuesday’s trading session, as investors grew cautions ahead of weight events in both sides of the Atlantic. On Wednesday, the U.S. Federal Reserve will announce its decision over monetary policy in July followed by ECB’s rate decision on Thursday. Binary traders have curbed their activities and bets ahead of the key policymakers’ meetings especially with the disappointment odds aren’t completely excluded. The strength of the US dollar is also another indication about binary markets’ weak confidence.
Indeed, both types of binary traders have their own logic justifications. Binary bulls see with other market participants clear signals of the US economy’s weakness through the past few months. However, bears as well as conservative investors remind the other side with the Fed’s previous stances when refrained from adding further easing measures even though the same downbeat data were present. Additionally, some of the Fed’s officials mentioned that more liquidity won’t offer a meaningful help for the economic growth while their main impacts could be limited to an increase in the inflationary pressures.
As for the ECB, the long running debt crisis and its ongoing effects are unmistakable. Moreover, the sharp rise in the Spanish and Italian debt yields along with the clouded position regarding Greece are heavy depressing factors on the confidence of binary markets. Hence, speculation of a near action from the central bank are having juice almost every day, especially after Draghi’s latest bold comments. The ECB president pledged to take whatever necessary to ease public borrowing costs which was in turn the main catalyst for the last week’s risk rally.
Nevertheless, the hard opposition from Germany, the biggest economy in Europe, could halt Draghi’s efforts to resume the bond purchase program which was suspended a few months ago. Therefore, there will be also a room for disappointment if the Europeans failed to agree on actions needed to contain the spread of debts contagion.
Technically, if the underlying asset price failed to regain its position above $1620, as already did after bounced off Tuesday’s low of $1610. This would suggest deeper correction to the downside, and in such a case the $1600 psych ground comes insight next as the conventional target/support. Break here would risk ending the last bull run off $1564. In the bigger picture, the mentioned scenario could activate the flag pattern seen on the daily chart. Thus, binary gold traders might expect bearish attacks toward the string of yearly lows below $1530 level.
The information in the above analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.