Analysis Method Trend Reversal – Binary Options
Another method of analysis for successful binary options trading, which can be realized with various instruments, is the determination of a probable trend reversal.
Live chart indispensable
In order to be able to look at the price developments of individual underlyings in detail, a live chart with real-time display of the prices in different time intervals is absolutely necessary. As the individual platforms for binary options, more information can be found at binary-option.eu , usually offer only rough representations, you should choose a separate tool. Some free offers on the Internet may well do the trick.
Recognize chart patterns reliably
First, you should be able to identify a trend, that is, the reliable movement of the price in one direction, even if it is interrupted by small fluctuations. As soon as this trend is strongly disturbed, it is worth taking a closer look. A trend reversal, i.e. the change of direction of the price, namely offers interesting points for opening opposite options. Some formations, as the graphical representations created by the price movements are called, give quite reliable indications.
Head and Shoulder – Head and Shoulder
A proven signal provider is the SKS formation, which is characterized, for example, initially by a price swing upwards – the left shoulder, a brief drop, which is followed by a renewed and higher rise – the head – and the subsequent right shoulder. The last and smaller rise of the price then most likely initiates a strong downward movement. Examine the prices of the underlying assets and you will be able to recognize corresponding formations.
Different buy signals possible
Since the fall of the price after the first shoulder is approximately the same as that after the head, this is called a neckline. For short-term trading with binary options, there are therefore a wide variety of starting points: On the one hand, you can assume that after the head the downward movement is replaced by an upward movement, on the other hand, the right shoulder will be followed by a strong downward trend – in the case of the reverse formation, of course, there are also opposite buy signals.