Technical analysis in binary options trading allows you to determine the best entry point into the market, to analyze the strength of the trend to predict the level of reversal. The classic strategies are based on the use of indicators, but their use is not always justified by fundamental factors. Despite the fact that the entry signal can be accurate, the news could disrupt the usual course of the trend.
We will consider several different tactics — tactics based on graphical analysis. Building specific figures by trend already includes the market’s reaction to the news and in conjunction with the indicators may provide more than 90% guarantee of opening of the position. But most importantly — building a figure will prompt an exit point from the market as well, which is important for binary options trading where there is such a thing as the expiry time.
Strategy “triangle” for binary options
A triangle is a figure formed on the market on the basis of which it is possible to predict the future behavior of the market. In other words, the angle of the triangle and its form are the evidence of the sentiment of traders and the strength of the price trend. To construct a triangle, its angles we can talk about the turning points in the future, the speed of movement of prices, the confidence of traders.
“Triangle” strategy for binary options provides the following types of triangles:
- Upward. Its example is illustrated on the figure. Formed mostly in uptrends, and the acute angle talks about the growth rate of the trend. The top line of the triangle is horizontal and the resistance levels are built from points located at different levels.
- Advice. This figure suggests that the number of traders who open a long position, increases in comparison with the number of “bears”. Opening a buy position is recommended when the price comes out of the formed triangle. The expiry time is 5-6 candles.
- Downward. The complete opposite of the previous option:
- support line based on the levels which steadily decrease;
- resistance level is stable — horizontal line.
The position to sell opens at the moment the price crosses the horizontal line of the triangle.
- Equilateral. Occurs very often has a completely different meaning of angles:
- appears as an upward and downward trend;
- indicates that the trend movement in one of the sides will definitely continue, but will hardly be strong;
- controversial figure, which suggests that the breakdown of one of the levels will still be, but reversal could hardly be.
Recommendation to trade: wait for a breakout to open a position in the direction of the trend.
- Expanding. This figure is rare and shows the uncertainty in the market. Used in conjunction with indicators which tell in which direction the extension will the trend move.
To sum up:
- There is no 100% guarantee that the figure will indeed give the correct recommendation in the direction of the trend. Because triangle binary options strategy is recommended for use in conjunction with indicators of technical analysis;
- figure can be used on any time frames;
- cannot be traded inside the shape, because there is no way to guess the direction of the trend. The triangle only indicates its continuation and tells strength and direction, but this signal is an optional one.
The advantage of triangle strategy for binary options is that the trader should be able to determine the shape and then to connect strategy indicators. This is a great workout for the attentiveness and also a strong support in the cases, when even the indicators give reason to doubt the desirability of opening the position.