A trending cycle shows the stance price is and it can be bullish or bearish. A buearish cycle is characterized by the following:
- Tenkan line is below the Kinjun and they are both rising;
- Kinjun line is below the cloud;
- the cloud is red (bearish);
- Chinkou line is below the candles twenty six periods ago and basically having no possible support in front of it.
- Whenever the above conditions are being met, it means price is trending to the downside and selling spikes should be the strategy to be adopted. Depending on the time frame a bearish trending cycle is identified, the expiration dates for the binary options to be traded are different.
There are two main strategies to be used in such a bearish trending cycle:
- whenever price is finding itself below the Tenkan, a trader should wait for a candle to close aboce the Tenkan line and touch it (so basically looking for a green candle that touches the Tenkan line and closes above it) and the very next candle to be a red candle that closes below the Tenkan. This sequance is a continuation pattern and it should be treated as such as normally price will continue moving lower after it. Buying puts is the only way to treat that and the expiration date should be different depending on the time frame used. For this strategy I would not look for smaller time frames than the hourly chart.
- another strategy would be to wait for the Chinkou line (the green line) to come and get close to the price, and by the time it gets closer look for a move to the downside as this is happening almost always.
Again, buying puts is the only way this should be treated but here we can choose more easily the expiration time as the time element is treated when dealing with the Chinkou. All we have to do is count the distance from until the Chinkou meets the price and that would be our expiration date, as by that time, if the trending conditions are strong, price should be lower.
Concrete examples are showed in the recordings that come with this sub chapter.