We continue the series of articles about the simple binary options trading strategies. All of these strategies differ from the others because they do not require significant knowledge in the field of technical analysis. The same can be said about the binary options strategy Breakthrough and Rebound. This trading system is very simple as in the definition on the graph, as well as in the trade directly.
This trading system, as well as any strategy using trend lines, does not require any additional indicators. Working with it is also very simple. To do this, the trader must be able to conduct trend lines. Basically, this strategy is similar to the triple-touch trend trading system.
To determine how to conduct a trend line is quite easy. If the lows are constantly increasing, so the upward trend is observed on the graph. In this case, the trend line can be carried out in two lows. As for the downward trend, everything is simple here either – the line is drawn in the maxima that decline.
Let’s take a close look to a screenshot of the graph.
The figure shows that the market has developed the upward movement first, but then there was a breakthrough of the trend. From the theory of technical analysis it is known, that often after the breaks of a strong resistance or support the price subsequently pursue these lines for re-testing on the reverse side. That’s how binary option strategy Breakthrough and Rebound works.
The price after breaking the support line moved downwards first, and then went back and tested the resistance (the former trend) from the bottom up. After an attempt to break through the resistance line was unsuccessful, the price continued its downward movement. In principle, such pattern on the graph is observed quite often, so you can apply this strategy almost every day.
In the previous part of this article we looked at the process of forming a trade signal as a part of our described strategy. But of course, most readers are not interested in the process, but in the time of entry into the transaction. Although in order to buy exactly the option you want, it is desirable to see the situation in the complex.
So you need to prepare for the transaction as follows. First of all, the trader finds a similar situation on the graph when, for example, after the uptrend the line breaks from the top down. At this point, it is too early to buy the contract, as a breakthrough has to be confirmed by another test line from the bottom up. Buying a put option is carried out when after the test the price bounces off resistance and secures below. Up to this point it is best to stay out of the market because there are situations when the price testing resistance, breaks it, and returns into a rising channel.
In principle, the same thing happens with the purchase of a call option on this strategy. The only difference is that the previous trend should be downward. Once the price breaks the trend upwards, it can return to it and test again. At that moment when the price of a failed test bounces off the trend and secures above, you need to buy a call option.
As can be seen, the binary option strategy Breakthrough and Rebound is really very simple and it can trade both for professionals and novices. To do this, you must learn to identify the current trend, conduct a trend line and wait for the right signal to enter the market.
That’s all for now. Got any questions? Just ask the expert!