Binary bets of the week: From No to Now What and Gold’s Time to Shine?
By Dave Evans of binary.com
From No To Now What?
After all the speculation and political heat generated, it seems financial and betting markets knew which way the wind was blowing. Financial markets are forward looking machines and it was no surprise to see Friday’s slump in the pound following the confirmation of the No vote in the independence referendum.
Markets had already priced in a rejection of independence, with some bookmakers paying out on the No vote as a publicity stunt. Sterling did spike higher immediately after a No vote was confirmed, but since then the pound has been floating with the tide.
That tide is firmly influenced by the gravitational pull of the US dollar. This week was had no surprises from the Fed, as it confirmed that it is still on a path of gradually but firmly bringing the US economy off life support with a slowing of Asset Purchases and interest rate rises on the horizon.
This week we’ve seen the yen pairs sprint to higher levels and since the start of August, there has been no point fighting the strength of the dollar bull, especially when looking at the USD/ JPY
USD/ JPY Daily Chart:
With the referendum decision now made, the British pound is now likely to drift with the general trend and until we see a significant move against the dollar, that trend is pointing down.
GBP/ USD daily chart:
The dollar’s strength is hard to ignore, but although listed against the dollar gold can have a life of its own. Sometimes described as an inflation hedge (not a very good one) and sometimes described as a disaster hedge (an inconsistent one!), gold ultimately will do what gold wants to do.
One exception is when you examine the spread between gold and its parabolic SAR. The chart below shows gold and compares it to times in the past where the spread has been increasing or decreasing. A large spread to the downside has regularly signalled at least a week long reversal in gold and this is what we’re looking at right now.
Gold daily chart
The chart above shows times in the past when the spread between gold and its Parabolic have reached extreme levels.
Despite the dollar strength, this indicator is flashing a buy signal once again.
A good way to play this is a HIGHER trade predicting that gold will close ABOVE $1250 in 14 days time for a potential return of 386%. Or put another way, betting that gold will be higher than $1250 at the close on October 3rd could return £48.85 from a £10 stake.
Disclaimer: This financial market report is intended for educational and information purposes only. It should not be construed as investment or financial advice and you should not rely on any of its content to make or refrain from making any investment decisions. Binary.com accepts no liability whatsoever for any losses incurred by users in their trading. Fixed odds trading may incur losses as well as gains.
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