Trend levels in binary options trading are used not only by beginners, but also by most successful traders. Trend levels are the basis of technical analysis.
The basis of profitable trading in the futures market of binary options is the correct forecasting of the development of the general situation on the market and the direction of the movement of quotes in a certain time period.
Novice traders often start trading without having familiarized themselves with the basics of technical analysis.
There is an opinion among them that the use of automatic indicators alone allows you to correctly determine all the indicators necessary for trading. This is a deep misconception, because indicators cannot always take into account absolutely all parameters of the market movement in their work.
For this reason, studying the basics of technical analysis is a necessity, since time-tested patterns of price fluctuations are used here to obtain forecasts.
Deeper knowledge in the field of technical analysis can be obtained from the educational programs of the broker. For example, a broker on this topic has an excellent selection of professional-level materials on their website. We will focus on the traditional concepts of technical analysis, such as the trend, its main levels and how to use them in binary trading.
So, a trend is a stable direction in which the price of an asset moves in one direction over a certain time period. Using the direction of the trend to determine the direction of binary options trading is the easiest and most effective approach to get high results in binary trading.
When determining a trend, its direction, as well as for using the patterns of behavior of price quotes during trend movements in binary options trading, the so-called trend levels are used.
Types of trend levels:
Consolidation level - this is the level of the value of the asset, near which quotes fluctuate for a long time. Usually these are round asset value levels – 1.30, 1.40. Reaching this level, quotes begin to push back from it, trying to break through it over and over again. The result is a long flat movement:
Resistance level - this is a line that, when plotted, is drawn along the highs or peaks of quotes during a trend movement. The price of an asset, when it reaches such a level, reacts to it with a rebound. The reasons for this behavior of quotes is the presence of a large number of trading orders near the resistance level, the execution of which constantly reverses the direction of quotes movement.
This level is a highly effective approach to forecasting the direction of the market and a profitable way to trade binary options.
When the level is broken, we buy a CALL option for an increase:
Support level is also the level of the trend, at which the price quotations turn in the opposite direction. The reasons for its formation are the same as for the resistance level - the presence of a large number of orders to buy an asset or insufficient volume of trading positions to break through the support level.
Lows (quote bottoms) are used to build the support level. Trading on a rebound from a support level is one of the most popular binary trading strategies.
When the support level is broken, we buy a PUT option for a fall:
trend channel - this is a pattern of fluctuations in quotes within the price channel, defined by the boundaries of support and resistance levels. When building it, both trend levels are used simultaneously. This approach is used for simultaneous trading of binary options in two directions - UP and DOWN.
Typically, trading in binary options channels is used for the so-called scalping, that is, making a profit on all short-term changes in the direction of quotes. The construction of the boundaries of the trend channel occurs according to the rules for constructing support and resistance levels.
When the price moves in a strict range, we buy an option in the opposite direction to rebound from the channel walls:
Using these simple patterns of fluctuations in quotes and understanding the processes that occur when trading on trend levels, already allows you to count on high profitability of binary options trading. These levels and trading approaches based on them allow you to increase the effectiveness of your main indicator strategies.
Also, you can use patterns in trading that are often formed and well worked out: