If you have a strong grasp on concepts like trend analysis and support and resistance analysis, then you should have no trouble in trading binary options. You must have good knowledge of these things if you want to make the most of your binary trading. You should also strive to understand key patterns when you have selected a market of your choice.
Market analysis is carried out using various charts that depict market sentiments for various intervals. Selecting a time interval for your charts in market analysis is also very important. You should know about the commonly used time frame for binary options. You may be surprised to know that the most commonly used time frame for an intra-day binary options trading is half an hour.
There are several patterns formed by price actions in the market. In this article, we aim to introduce you to the market analysis based on two commonly formed patterns of any binary options market. The patterns that we will be talking about here are triangle pattern and parabolic pattern.
Triangle Pattern In The Market
You may easily notice different types of triangle patterns in the market. They are continuation patterns formed by convergence of two trend lines. A wide gap can be seen between small high and low ranges that often develop incrementally. This results in nearly no difference between high and low points of the market. This is indicates about a breakout where prices are not expected to move higher or lower. There are many different types of triangles that you can see in your pattern analysis. Some common examples are ascending triangles, descending triangles, symmetrical triangles and equilateral triangles.
Triangles are compressions of the distances between high points and low points of the market and can be used to earn great profits. You can see the chart as a scuffle between optimistic and pessimistic sentiments in the market. You should be able to locate strike prices outside the triangle and play a breakout as this would maximize the chances of earning profit from the trade. It is up to you to see the triangles and make decisions accordingly. Ascending triangle usually goes upwards to resume its upward trend and descending triangle goes downwards to resume its trend downwards. Sometimes, you will even see a symmetrical triangle which may move in any direction which makes it unfavorable for the traders.
When you see a parabolic pattern, you should know that it is an indicator that price movement will stop, pause or sometimes it may even revert. Anyone can notice that the price is at its extreme and it usually happens when there is a rush of buying or selling due to different factors that affect a commodity or stock. Parabolic curve is the result of crowd mania and mainly because of the fact that traders see an opportunity to make profit and other traders see this opportunity and fear that they will miss it. When it nearly reaches an angle of 90, traders know that it cannot stay like this forever and the price often pauses and then reverses which gives great profits to first sellers.
By understanding these patterns, you can make the most of the various opportunities that may arise from time to time. Make sure you never miss out on these golden opportunities of making money through binary options trading.