In order to successfully utilize this financial tool when trading with binary options, investors must clearly and stability predict the direction of market movement of a specific asset. Beyond a doubt, this simple profit mechanism and trading tool algorithm enables traders to earn a high and stable income, however, for most online traders it backfires. The reason for it is simple, there a lack of understanding of professional market analysis, which allows you to generate the overwhelming majority of forecasts with positive expirations on the basis of distinct signals, tools, and resources.

Today, we’ll look at one of the most simple and successful methods of forecast generation for set-time rates, based on harnessing levels of support and resistance. The application of this system, based on trend levels, enables any investor to receive the maximum amount of profitable binary rates.

So, once you’ve opened the chart of any financial asset, you can accurately track the cyclical pattern, where the price movement of the financial tool performs a reversal, reaching specific market zones. Specifically, the zones or levels referred to as trend support and resistance lines. Whereby, the technical conditions for forming these levels are caused by the influence of the economic principles of supply and demand on the tool’s price formation.

As is well known, the leading factor, that influences asset rate movement, is supply and demand. Furthermore, it is necessary to differentiate between the market effects each has. Specialists connect demand with the active format of a bearish market, just as supply is an influential factor in a bullish market. Therefore, demand always suppresses the asset rate, whereas the demand propels the tool price up. These factors are the economic and technical basis for the formation, on the chart, of the liquidity of trend level support/resistance. In practice, it all works quite simply, the market is always influenced by the aforementioned factors, however, situations arise, when supply and demand are balanced, that the market moves in horizontal planes (consolidation).

Furthermore, the majority of professional traders view this principle as a signal for forming a contract (which we will go into further detail a bit later). Specifically, the balance between supply and demand is the basis of trend level formation. Let’s go through it in as much detail as possible.

 

What is support?

The level of trend support is the asset price market fluctuation zone, in which the suggested tool falls to the balance level with a supply indicator. Therefore, a decrease in price movement takes place with subsequent market consolidation and fully-formed trend reversal in the direction of growth.

Technically, on the asset chart, the support level formation process is built on the visual market zone specification, in which the price carries out several reversals in the direction of growth. On that note, it is vital to note, that the larger the affected support asset price zones appear on the chart, the stronger the trend level support is. In order to achieve the support level reflected on the chart right away, it is enough to combine several market maximums in the selected zone, for analysis, on the active chart

 

Levels of support and resistance in binary options trading

 

What is resistance?

The zone or level of trend resistance is an asset price indicator, in which supply to the financial tool is maximally balanced with that of demand. Like in the previous option, the moment the level of trend resistance is reached, a market consolidation forms and there is a trend movement reversal.

Technically, on the asset chart, the resistance level formation process is built on the visual market zone specification, in which the price carries out several reversals in the direction of decline. On that note, it is vital to note, that the larger the affected resistance asset price zones appear on the chart, the stronger the trend level is. In order to achieve the resistance level reflected on the chart right away, it is enough to combine several market minimums in the selected zone, for analysis, on the active chart

 

What is support line in binary options trading?

 

As you see, in spite of the complex basis for trend level appearance on the financial asset chart, their identification and formation process doesn’t raise any difficulties. We’d like to note, that, in practice, the trend levels don’t only form horizontally. The issue is, that the market is in a constant state of ascending and descending trend formation, both from a short-term and long-term perspective. Therefore, we can observe the levels of resistance and support in an inclination. At the same time, the principle of level formation remains standard:

 

What is resistance level in binary options trading?

 

Among professional financial investors, trend levels of resistance and support are considered classic methods of technical analysis, which enable the most accurate responses to any asset price reversal. Therefore, this system, which is based on the actions and patterns made by resistance/support formation levels, are more effective for trading binary rates. Utilizing trend levels enables you to construct masses of interesting and profitable systems for trading options, which demonstrate relatively high levels of success, more than 80% produce returns. We recommend considering this basic selection of forecasting methods, based on support and resistance levels.

 

Trend levels – Trading Strategies

  • Classic

A simpler method of generating trade forecasts, based on trend levels, is done by applying the classic rate reversal signal from the level of resistance or support.

In practice, it’s all extremely simple. When the asset price reaches an equal level as the support, in 95% of situations there is a price reversal in the direction of rate growth, which is a clear signal to BUY with a high likelihood of producing a profitable contract:

 

Trend levels - Trading Strategies

 

The level of support can be used for trading on a trend from any direction, in this case, it only differs in the specifications for evaluating the expiration indicator. The fact is that on accurate declining trend, the support level defines the areas of reversals, therefore, with this option, it is worth using contracts with a minimum return. On the support of an ascending trend functions as a signal of the level of demand, based on market tendencies, therefore, in this regime, use rates with more sustainable returns.

When working with resistance levels, use the classic signal for rate reversal only with opposite mode of construction. The trend resistance breakthrough level is a highly accurate signal for BUY:

 

Classic trading strategies

 

As for the specifics on option expiration calculations, the opposite principle is also applied. On ascending trends, use rates with minimum returns, because their signal corresponds to short-term price corrections, and on declining trends, use sustainable returns.

This classic resistance/support level trading example, in a regime with minimal risk, empowers you to earn a stable profit off trading with binary options.

  • Breakdown Strategy

Despite the fact that the basic identification sign of tren levels is a cyclical asset price reversal. Situations arise fairly frequently when the market breaks through the level of support and resistance. This situation speaks to the sharp growth of an supply or demand on an asset, and also on the reversal of the basic tendency of market movement. These trend level breakthroughs embody the effects of many influences. The main one here, being the release of positive or negative news, affecting the price perspective of the financial tool.

The signal, in terms of the breakthrough level, is a very effective indicator for the formation of option rates right from the turning point of the trend movement. In practice, the signal appears like the following image:

 

breakdown trading strategy

 

As you see, after the breakthrough, the market receives a strong impulse to form a new trend. Furthermore, it is worth noting that frequently following a level breakthrough, it changes its configuration, so resistance becomes support, and trend support becomes resistance. Besides that, in this regime for generating trading signals, an additional pattern is observed, which gives you a second chance to utilize the breakthrough level to place a trade. After the level breaks through, the price always returns to the trend zone, and only after is there movement in the original direction:

 

Channel trading Strategy

 

Despite the low cyclicality of this signal format, this system, thanks to its forecast accuracy, enables you to earn money on the binary options market.

  • Channel Strategy

This system is based on simultaneously applying two trend levels. Once you set up the support and resistance levels on the asset chart, you are left with a channel of prices, where the market forms the current trend. Therefore, creating the opportunity to trade in two directions at the same time. Using standard system signals, in the form of rate reversals in the direction of the opposite trend level, we can form the most successful contracts and quickly increase total investment capital. In practice, applying resistance and support as a channel trading system appears like this:

 

standard trading systems for options forex and crypto trading

 

We have proposed several standard trading systems for you to try, which professional investors often employ. These approaches become a powerful arsenal for effective technical analysis on the market with the aid of resistance and support levels. The simplicity and effectivity of trading strategies enable you to quickly understand in fine detail how they work, which leads to stable trading profits on the binary options market.

 

OPEN DEMO ACCOUNT

“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”

Levels of support and resistance in binary options trading
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