Whenever trading binary options, the main concern a trader has is to look for the best possible setup for the option to expire in the money. If the option is in the money at the expiration date, then this means the option is profitable and the trade was successful. The following are the conditions for a binary option to be considered profitable:
- buying calls implies a trader is looking for price to increase, and therefore, in order for the option to be considered profitable, the price at the expiration date should be bigger than the striking price (the price the option is actually bought). If these conditions are met, then the option is said to expire in the money, and it is considered profitable;
- buying puts implies a trader is looking for price to decrease, and therefore in order for the option to be considered profitable, the price at the expiration date should be lower than the striking price (the price the option is actually bought). If these conditions are met, then the option is said to expire in the money, and it is considered profitable.
Based on the above, the expiration date is important when trading binary options and, based on the time frame analyzed, the expiration date should very, and hence the binary options should differ.
The monthly chart is the maximum time frame offered and this is a long term interpretation of the market behavior. The same areas like on the weekly time frame should be considered as support and resistance for price based on Ichimoku, with the mentioning that on the monthly chart, being a higher time frame than the weekly chart, the areas should be even more powerful. Therefore, below are the things to look for when expecting a possible bounce/rejection based on the Ichimoku elements when looking at the monthly chart:
- whenever price is touching Tenkan;
- whenever price is touching Kinjun;
- whenever Chinkou touches the cloud (ideally the base of the cloud if market is trending to the upsie or the top of the cloud if market is in a downtrend).
- whenever Chinkou is meeting the candles in front of it. The exact opening or closing price of a weeky candle should offer powerful support/resistance levels.