Stock Charts

BO206 Lesson – Learn how to setup and use Stock Charts for Binary Options Trading Video & Transcript

Welcome to Binary Options 206, chart setups. In this video, I will combine everything I’ve taught in the binary options 100 series and so far in the binary options of 200 series to demonstrate some very profitable chart setups. This is where financial trading and technical analysis gets incredibly exciting for me because this is what it’s all about.

Analyzing price charts and opening positions, which will result in us profiting from financial markets. There are two steps to creating profitable chart setups. There’s the analysis and then the confirmation signal. When we analyze our price charts, we want to identify what price is doing. Is price uptrending, downtrending, or moving in a sideways direction? And those market types I covered in Binary Options 204.

We also want to identify potential support and resistance in areas such as Fibonacci Retracement, horizontal support and resistance, dynamic support and resistance, trends support and resistance– those topics I covered in Binary Options in 201, 202, and 203.

And then we need to decide which signals we are going to trade for the coming trading period. Candlesticks that could act as signals are combined Pin Bar Candlesticks, Doji Candlesticks, and Engulfing Candlesticks. And each of these candlesticks is covered in the binary options 100 series. Binary options 106, Binary Options, 107, and Binary Options 108. These two steps, analyzing price charts and then looking for confirmation signals, are a strong way to profit from binary options.

And I will give more detail to each of these steps as this video goes on. So a very brief and simple example. Through our analysis, we may recognize a potential resistance area. This could be a Fibonacci Retracement level. It could be a horizontal resistance that prices bounced off a number of times in the past.

Our confirmation signal is a pin bar. We get a pin bar on this resistance level. Price is rejected. That is our chart setup. That is where we would place a put and hopefully profit from our position.

This is an hourly chart of the euro against the US dollar. The chart is displaying the price action of the last couple of days and we’re going to use this price data as part of our analysis in preparation for our trading for the day. So let’s analyze this price data.

First of all, let’s look for any potential horizontal support and resistance. The first thing I notice is there are a number of clear rejections at the top of this chart. So let’s mark that with a horizontal resistance. We have a reversal of price here, a number of rejections here, and here, and also here.

Another horizontal level would be this area down the bottom. Prices falling heavily on the downside, and then we get this double bottom and price reverses. So price comes down, we have this double bottom, and then we start this clear trend. So let’s mark that horizontal level. Like so. Let’s now use our Fibonacci Retracement tool.

From my analysis there are no pushes that we could use Fibonacci Retracement on. Obviously, there are pushes to the downside and pushes to the upside. But the retracements are over. So we won’t be using the Fibonacci Retracement at all in this example but coming examples we will.

What is price doing? It’s currently moving in an upwards direction, but we do have a lower high here, which could signal that this up trend is over. We have a push, a pull back, a push, a pull back, another push. Price is pulling back. And we have our lower high. So potentially, we’re looking for put options.

You could argue that we could use all Fibonacci Retracement on this push here, but seeing it’s a found push there is no point, as we’re looking for put options. We’re not looking to trade on the upside.

Let’s look for any trend supports and resistance. We have two clear lows here so let’s join them together. There we go. And then let’s join our two highs as this could act as a potential resistance or support if it’s broken. OK, so that’s our analysis done. It took a couple of minutes at most.

And let’s trade this hourly chart. The 7 o’clock candle is about to open. There we go. And it closes. We have a pin bar. But that’s not going to be traded, as is not against one of our support and resistance levels. I’m only looking to trade pin bars in this video. But we want the pin bar to be a confirmation signal against a support and resistance level and this one isn’t. Let’s go for another hour.

We have a second pin bar. Once again, this won’t be traded. It’s not against a supports resistance level. Another hour can pass. And we have our third pin bar for the day. This pin bar we are going to trade. The reason being is it’s a clear rejection of this trend resistance. So we could place a put option and price falls heavily on the downside.

So you can see this rejection clearer, let’s extend the resistance so we have a pin bar rejected against this resistance, and price has moved on the downside. Price didn’t reach this resistance so we had no rejections. And if we look at this trend, support price broke straight through it. There are no confirmations there.

We have our horizontal support at the bottom. Once again, price broke through that support, but it now could play as resistance. The whole floor becomes a ceiling concept. So let’s follow price the rest the day and see what happens. Price comes back up to this potential resistance. We have a pin bar. A signal to place a put. It’s rejected against this resistance, and price falls on the downside once again. And that’s the trading day over.

Let’s now analyze and pretend to trade a four-hourly chart. This is a four-hourly chart of the euro/ US dollar. We have a couple of weeks of price action on the chart. Let’s analyze it, and let’s look for pin bars as a confirmation of our potential supports and resistance. First or all, let’s do horizontal support and resistance.

I think there’s a clear supports and resistance level here. Prices come up and pull back even know this resistance was broken. It could now act as support. Another level could be here. We have a number of pressure reversals at this level. That may become clear once it’s marked. OK So price here. Rejection here, here, here, and here.

And then that’s mark this low here as a support. Prices come down and strongly moved on the upside. Fibonacci Retracement, we have p on the upside prices uptrending. We have a push, a pull back another push, a pull back, and a push. It looks like prices now are pulling back or tracing. So let’s use our Fibonacci tool. Go from the bottom here to the top.

So we have some levels of potential support where this retracement may end and we make go for another push. We can mark them with horizontal lines if we wish. So there, there, there, and there. So we have lots of horizontal supports and resistance on this chart.

And finally, let’s look at our trend supports and resistances. We have a clear low here, and a clear low there, so let’s join them up. And there we have it. So let’s trade this four-hour chart and see how it goes.

Four hours pass. We have another bearish candle. Price continues to retrace. It’s not a pin bar. Price is rejected against this support level, but we don’t have a pin bar so we wouldn’t trade that.

Another four hours passes, and we have a Doji candle. If we were trading Dojis, we could open a position now. It’s a Doji against this support. So if it was our chosen signal to trade, there’s our confirmation signal on a potential support and resistance. But we’re looking to trade pin bars so we’ll leave that candle.

Price does go up, so if we were trading at four hour binary option that Doji would have been profitable. Another four hours passes. We have another Doji Another four hours. Another four hours. Another four hours. Another four hours. Another four hours. And then our final four hours.

And we’re now at current price. There were no pin bars in this analysis. Sometimes they’re aren’t signals to trade. But if we were trading Engulfing candles or Doji candles, there were two signals on this chart.

Our first here, a Doji against this support would have been profitable if we were to trade a four-hour binary option or perhaps a daily or weekly binary option as price came on the upside here. Our second signal, If we were trading engulfing candles, is this signal. A big Engulfing candle of this support level. And price is now going on the upside.

Obviously, you can trade as many signals as you like. You’re not limited to just trading one signal. There’s no there reason why we couldn’t trade pin bars, Dojis, and engulfing candles on potential supports and resistance areas.

We’ve looked at an hourly chart and a four-hourly chart, so let’s look a shorter time frame down. Let’s go to 15 minute chart of the euro-US dollar. This demonstration is going to be slightly different as we have no price data to test analysis against. Instead, in this video I’m to going to analyze this 15 minute chart in preparation to trade tomorrow.

So first of all, our horizontal supports and resistance. We have an up trend. Price is pushed, is pulled back, its pushed and pulled back. So we have some highs and lows. Let’s mark them. We have a horizontal line. A potential resistance there. A potential support. And then some more areas.

I’m also going to mark this low here. Price was down trending. And with great momentum has changed direction and has reversed. So let’s mark that low with a horizontal line. I’m not going to use Fibonacci Retracement. The reason being price has pushed. It’s pulling back, but it seems to have gone for another push. If this wasn’t here, then I’d obviously do Fibonacci Retracement and get some more levels but I think it’s slightly too late for that.

Trend supports and resistance. Let’s use a trend line. I think if we mark these lows and if we duplicate this line we may be able to creates a channel. And there we have it I’ve analyzed the chart from a very technical view. I want to trade pin bars and I’m ready for tomorrow’s trading on a 15 minute chart. As always, thank you so much for watching. Please check out our website, binaryoptions.education