GBP/USD Analysis: Increase in Call option OI validates bullish break, eyes 1.35
|GBP/USD is gaining altitude as expected and looks set to test 1.35 levels this week.
Brexit optimism keeps the pair well bid today. As of writing, it is trading above 1.34 handle. The forward momentum was set in motion yesterday on optimism that the two sides - UK and EU - are close to reaching an agreement on the key topics of the Brexit negotiations.
The GBP/USD Dec. expiry options open interest data published by the CME highlights the increased demand for the bullish bets.
| Call Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 40,437 | 1,122 | 19,967 | 480 | 20,470 | 642 |
| Put Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 36,223 | 341 | 2,824 | -19 | 33,399 | 360 |
- Open positions in the calls increased by 1122 contracts yesterday, while the open positions in puts rose by 341 contracts.
- The ratio of change in open interest in puts to change in open interest in calls stands at 0.30. The reading below 1 signals that most investors are betting on a likely bullish trend going forward.
- Also, details show 1.34 call added 483 contracts, while 1.35 call added 168 contracts. The big additions in the at the money call (1.34) and near the money call (1.35) indicate scope for a rally to 1.35.
The options data validate the bullish breakout on the GBP/USD chart.
Daily chart
The above chart shows-
- Bullish channel breakout.
- The RSI is bullish and trending, also well short of the overbought territory.
- 5-MA and 10-MA slope upwards, favor the bulls.
The bullish channel breakout has opened doors for 1.3565 (target as per the measured height method).
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