Trading binary options is no different (or at least it should be no different) than trading any other financial product in the sense that if you are using technical analysis for finding potential future price movements then it really didn’t matter what you are analyzing as a product.
This Fibonacci ratio is extremely important as it can be used, like showed in the four recordings that are coming with this project, in two different situations: measuring the extended wave in an impulsive move and/or identifying irregular flats that will not retrace previous b wave (irregular failures).
In the first instance it should be mentioned that an impulsive move is mandatory to have at least one extended wave and the extension means that the wave needs to be bigger than 161.8% when compared with the next longest wave. Measuring this wave is made by taking the Fibonacci expansion tool every trading platform offers and projecting the level. The outcome should offer us the answer if a move is impulsive or not as the 161.8% level is minimum distance price should travel in an extended wave.
The other situation we are exemplifying in the recordings that are coming with this mini educational series is about irregular flats, to be more exact about irregular failures. In such an instance, the b wave retraces more than 161.8% when compared with the previous b wave and this is important because it means price will never completely retrace the previous b wave so we should look to buy call options if the flat is coming after a bullish trend or to buy put options if the flat is coming after a bearish trend.
This type of situation is to be called irregular failure, and it is important as it brings into discussion the time element also in the sense that price should retrace the previous c wave in less than the time taken for it to form. And there you go, by including time in any analysis we have a competitive advantage in the sense that binary options depend on the expiration date in order for them to be successful or not.
More details are to be found by watching the recordings that are coming with this project and, more importantly, there are plenty of examples there, both on treating the impulsive moves and finding irregular flats.
I would say between the two situations explained in this project the irregular failure is the one people fail to properly understand but its importance is being given by the fact that time should confirm the pattern.
The whole project will be uploaded on our official Youtube channel so make sure to check it together with our previous educational projects.