Support and Resistance Based on It

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.

While the weekly chart is considered not to be traded on the short term horizon, such a higher time frame has different advantages, and the most important aspect to take into consideration is the fact that all the Ichimoku elements are offering extremely strong support/resistance areas. Therefore, below are the things to look for when expecting a possible bounce/rejection based on the Ichimoku elements:

  • 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.