graphical analysis pattern is like the , a signal to continue the trend after a stop. You can set up a strategy by using pattern for buying Call or Put options.
The figure is somewhat reminiscent of a Triangle, or rather one of its varieties, called Symmetrical triangle. However, a significant difference with the similar is the fact that the formation of the is much shorter than the one of a Triangle formation.
Moreover, in some characteristics is similar to Flag figure. It also shows the continuation of price movement main direction. At the same time, the difference between this pattern and Flag is that local levels are not parallel to each other and converge at a single point.
may be both (i.e. formed in the growing market) and (its formation occurs on a downward market).
It should also be noted that graphical analysis pattern has a slight slope on the opposite side of the current trend. Therefore, in order to determine the future direction of a price movement we can use the presence of the so-called flagpole, i.e. trend preceding the formation of the .
After the chart pattern is formed, the price usually breaks the (top line, which is held on the highs) and the trend resumes. This graphic figure represents a small respite, which takes the bulls (in the growing trend) or bears (in a downtrend).
This respite is associated with the appearance of balance in the number of buyers and sellers, as well as fixing deals. But we should not forget that when developing this figure, the price rushes downstream of the primary trend, which shows the end of the period of temporary price consolidation.
Buying Call option at a market
When using binary option trading strategy in a growing market, it is recommended to buy Call options at the moment when the price on the chart overcomes the resistance line. The breaking of the upper face of the pulse usually gives a strong impetus in the direction of the current trend.
Testing of this figure occurs when the price is not only broken by the upper line of the , but it is able to gain a foothold on it. Otherwise, it is possible to form other graphic patterns, as well as changes in the general direction of the price.
Buying Put option in a market
Regarding the application of binary options trading strategy in a market, it is recommended to buy a Put option at the moment the price is overcoming the . After that, just as in the example of in a market, the price usually gets a strong impetus for further downward movement.
As for working out of this pattern, it occurs when the price is fixed at the level of support. It is very important to wait for this moment before buying the option. Because the breakout may be false, the price will go back and the pattern will not work. Also, there is a likelihood of changing a downtrend trend to an upward.
The most important thing for a trader – to be able to correctly identify what kind of shape is formed on the chart. After all, you can easily confuse , for example, with the Triangle. To avoid this, you must pay attention to the existence of the flagpole, as well as the time that is spent for the price formation.