EUR/USD Price Action Strategy for Binary Options

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Clearing your charts of all indicators forces you to focus on the price. Price movement is what creates profits and losses, and is therefore the most valuable indicator you have.

When a trend is potentially reversing, step aside, until the new trend asserts itself. Then, trade that trend. The yellow background marks the European session, pale yellow marks the start of the US session overlap period.

Figure 1 shows a strong downtrend. The first is very weak, and is more of a pause than a pullback. If you were already short, you could have easily held through this pullback See: Only looking at a minute time frame it would have been tough to eurusd price action strategy for binary options short on this pullback since it was so brief.

Moving down to a smaller time frame such as a 5-minute or 1-minute chart provides a better entry signal in this case. The second pullback starts out exactly the first, except that it continues to move sideways, then a sharp move down and up, followed by another strong move down which triggers the continuation of the downtrend. Figure 2 shows how this could be traded.

Once the price moves below eurusd price action strategy for binary options low of a green bar, enter short, with a stop above the recent high. This happened twice during this pullback. The first time would have likely resulted in a loss, as the price made a quick run higher following the entry. The second trade would have caught the ensuing the downtrend, more than making up for the loss. Buying in this situation, while it may work out from time to time, is unwise.

Looking at the overall context of the market we can clearly see that the overall price action is to the downside. Anyone can enter a trade, it is the getting out that eurusd price action strategy for binary options be difficult. Exiting with price action means we hold the trade until there is some indication to exit the trade.

Based on the trade in Figure 2, the short position is held until there is evidence to get out. One method is to eurusd price action strategy for binary options move your stop loss down to the high of the last bar.

Alternatively you can utilize a fixed profit target. I often use a 1. If my stop is 10 pips, I place a target at 16 to 20 pips. During a strong trend your target will usually be hit, as it was here, but can leave some money on the table if the trend blows right through your target and keeps going.

Even with this drawback, I believe it to be the most useful exit technique. If the price is moving very strongly as it approached your profit target, move it out a few more pips, but bring your stop order to the original profit target level as soon as the price passes through it. This way, at minimum you lock in the original target, but may capture a few extra pips as well.

Removing indicators will force you to watch price action more closely. Interpreting price action takes time, but is a valuable skill to have. It can help pinpoint entries and exits, as well as avoid low-probability trades.

Switch between time frames to see opportunities for entries and exits that may not be visible on the time frame you are watching. Trade with the trend; enter on pullbacks and exit using a fixed target or some variation of itor when the price action dictates the trend may be turning. Exiting With Price Action Anyone can enter a trade, it is the getting out that can be difficult.

Final Word Removing indicators will force you to watch price action more closely.

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Why Trade this System? One of the main reasons we chose the EURUSD as the underlying asset of choice to trade this system is because it is the currency pair that is traded the most in the forex market. This ensures that as a binary options instrument, it is available for trading all day long and will have good liquidity, enabling you to get good pricing.

You will not have to buy costly bets that will have a greater risk than reward. If you are starting out in binary options trading , this is a great way to start your trading career. Most binary options brokers do not provide charts for use in trading analysis, so you have to get the charts yourself. Since the underlying instrument is a forex instrument, you can easily get a chart by downloading an MT4 platform from any of the popular forex brokers like forex.

The strategy in question is to be implemented on a minute chart, and the strategy will make use of the following indicators:. We also wait for the MACD lines to cross from negative to positive. We also wait for the MACD lines to cross from positive to negative. Once you have got a confirmation of the signals, the next step is to choose the binary option trade of your choice. Make sure you identify the resistance points and keep your strike price below the resistance so you can be sure the price action will actually touch the price barrier you have set.

In this instance, you can set your price barrier well below the nearest resistance so the price action has no chance whatsoever of touching your price barrier. Repeat the same trade sequence in reverse fashion if your signal indicates a bearish outcome. Whichever trade you decide to take, you should at least have 4 different trade options to benefit from:. Setting Up the System: This is a momentum indicator that shows the strength of the signal. This is a trend signal.

Here are the trade rules for this strategy. Whichever trade you decide to take, you should at least have 4 different trade options to benefit from: Touch — Price barrier between market price and nearest resistance.

No Touch — Price barrier below the nearest support. Touch — Price barrier between market price and nearest support. No Touch — Price barrier above nearest resistance.