Applying the principle of the Ichimoku
Ichimoku is a versatile tool that allows traders to receive all-around data about the market and to make up their prognosis on the basis of this information. It is for this reason we decided to publish a binary option strategy Golden Cross. This strategy, as well as many others that we have already published, is fairly simple but at the same time profitable.
At the heart of this strategy lies the Ichimoku indicator, known to many traders. In the description of this strategy we will not dwell on the principles of this indicator’s operation, as we already spoke about it in details on our site.
We are interested here only in one of the components of the indicator, namely lines Tenkan and Kindzhun.
From the other sight, a trader can use the Ichimoku Cloud in addition to obtain more effective signals on this binary option strategy. That is, again, the beauty of the indicator is that it has both these curves and the cloud, and a trader does not need to install and configure the additional algorithms. Golden Cross strategy works with only one indicator.
Let us appeal to the graph.
We have set the indicator Ichimoku on the graph with the default settings. The curves Kindzhun and Tenkan are painted in blue and green colors. As the graph shows, they occasionally disperse and then meet again. We can say that this part of the indicator is something similar to the well-known indicator moving averages. The principle of this strategy’s operation lies in the same aspects.
Of course, the most important task of this strategy, as well as of many others, is to give a trader clear trading signals. It is therefore necessary to track the Tenkan and Kindzhun curves’ behavior closely. A trading signal occurs in the moment when these curves meet at one pointon a price chart.
Golden Cross binary option strategy is set to work with a call option. When the indicator Ichimoku provides a necessary signal, you have to purchase exactly this type of contracts. But to make the corresponding signal stronger, it is necessary to take into account a number of conditions.
We knowingly said in the beginning of the article that in this strategy it is desirable to pay attention also to the fact, where the Ichimoku cloud is located and its position in reference to the current price on the graph. On the screenshot we have two examples of work on this strategy. The first also makes quite effective trading signal. It occurs below the cloud Ichimoku at the moment when the price is also below the cloud. The problem is that often the price has the properties to bounce off the cloud Ichimoku.
But the signal yet cannot be called a strong one, because the cloud Ichimoku, despite the Golden Cross, may block the way for the growth of prices. In our example all ended well though. The second one is a stronger signal, because when the Golden Cross is formed, the price is located above the cloud Ichimoku, and thus confirms the signal strength.
Thus, the binary option strategy Golden Cross is quite strong and simple at the same time. This method is perfect for the financial market analysis. The non-trivial signal visibility is one of its brightest pros. That is, seeing the signal, the trader immediately may buy a call option (given that he subjects to all conjunctions).
That’s all for now. Got any questions? Just ask the expert!