Let’s talk about Binary Options Graphical Strategy «Triangle»
To one of the simplest and clearest strategies that help binary options traders to be guided in issues of price formation is a triangle strategy. If the price increases, then the triangle is called ascending, if on the contrary – it is called descending.
Both of these species are formed in a bearish or bullish market, and tell about the dynamics of the market situation. The strategy also identifies a symmetrical and expanding triangle, but the latter (due to its specificity) is not recommended to be used in binary options.
How to build a Triangle pattern
To construct a graphical model of the triangle, select a point on the time frame that visually stands out. In the same way it is done in the construction of support and resistance lines. Drawing an imaginary line on a maximum and a minimum we get a figure with top and bottom – our triangle. By its shape and projection behavior strategy in the market can be interpreted.
Types of a Triangle strategy
Ascending Triangle is a figure which visually shows up. As a rule, the upper price resistance line is horizontal or slightly looking up, and the bottom line, rising up, forms an acute cant angle. Most often, the price breaks through the resistance line upwards. After that a trader should purchase an option CALL.
Descending Triangle is a complete contrast to the ascending. The top line shows a downward trend, but the bottom line stands as the support line. In such cases, the logical behavior of a trader is to wait for breaking through the support line and buy a PUT option on the second candle.
Symmetrical Triangle is not so simple, here the price can move both upwards and downwards and a trader needs to be extremely attentive to the graph change and, above all, to assess the risks. Binary options experts advise to stop the trade if the symmetry does not change so as necessary, even in the slightest degree.
The strategy of behavior during the construction of the symmetrical triangle figure is waiting for the breakdown of the support line or resistance line, and depending on this – a purchase of CALL or PUT option. Again, to avoid false signals it is necessary to wait for the opening of the second candle in the same direction as the breakdown.
Forecasting and anticipation of a breakdown
To determine the approximate point of the gap one should measure the height of the widest part of the figure and measure out the same distance on the chart. The second option of the triangle break point prediction is to select an optimum point on the basis of the triangle. Through this point parallel to the support line a right line is drawn.
Next, we estimate the resulting graph, and if it is descending, then the line is drawn to the base bottom of the figure – this is the bottom line of the minimum price barrier.
That’s all for now. Got any questions? Just ask the expert!