Graphical models underlying this strategy are reversal. That is, it is assumed that their formation on the graph is completed with overall trend reversal in the opposite direction.
Double Vertex and Double Bottom
In order to define this graphical model, a trader needs to pay special attention to the behavior of prices. Double vertex is formed in a situation where the price of the trading instrument rises twice to the level of resistance (horizontal line that represents the level which is controlled by the traders in the market). In this case, the breakthrough of the level does not occur.
Binary options trading strategy “Double Vertex” involves buying a Put option at a time when the price of the instrument not only pushes off the resistance level but either breaks the low, which is located between the vertices. Patterning “Double Bottom” occurs when the price of the trading instrument, twice sinks to the support line, but does not break it. This model is a mirror image of the graphic pattern “Double Vertex”. To work it off a trader must follow the same conditions as for testing the graphic pattern “Double Vertex”.
Triple Vertex and Triple Bottom
There are situations where during the formation of the pattern “Double Bottom” price fails to exceed the local high, which is located between two points that make up the bottom. At such times, we should expect the formation of other, similar figures, which are called the “Triple Bottom”. In this case, the price can once again touch the support level and testify about the upcoming trend reversal upwards. The formation of such figure can take up to several months.
Binary Options trading strategy “Triple Bottom” involves buying a Call option after the price breaks the local maximum (resistance level), located between three points symbolizing the bottom. It is important to remember that prior to the formation of this figure, the graph should have a long-term trend downwards.
The same, only exactly the opposite, can be said about the formation of the pattern “Triple Vertex”. In situations where the price does not overcome the support level (local minimum) after the formation of the double vertex, it touches the resistance line a third time. After the rebound from this level the phase of completion of the figure begins. The price goes to the local support level (minimum, which is located between the three vertices).
Binary Options trading strategy “Triple Vertex” involves the purchase of a Put option, when the price of the instrument breaks through the local minimum and goes below. It should be noted that the prerequisite for the formation of this graph pattern is a long-term uptrend, which precedes it.
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