Binary options is simple: Pattern "Three Soldiers"
- VFX Blog
- For beginners
The appearance on the price chart of reversal figures (patterns) of candlestick analysis is one of the best binary options signal to open a transaction. The trend is not only confirmed but also is at the very beginning, which makes it possible to keep the deal for a long time not only on older but also on smaller timeframes. Let's look at one of the most reliable reversal patterns – "Three soldiers".
About candlestick analysis
The methodology was developed by the Japanese trade in rice Munehisa Homma in 1755 and has not changed significantly to date. He also found the basic candlestick patterns by which the reversal or continuation of the current price movement is determined.
In terms of technical analysis, candlesticks confirm two basic principles:
- Price (candle) includes all factors affecting it; no additional analysis is required (one of the principles of Dow Theory).
- History repeats itself and with the help of graphical patterns, it is possible to predict the actions of most stock players (Eder's Chaos Theory, Elliott's wave model).
The volume of the article will not allow us to describe in detail all the candle patterns; we well only on the simplest and at the same time strong figures. They can be used immediately even in binary option for newbie’s.
- On a bearish trend, three rising candles appear successively: we have “Three White Soldiers” and open the CALL-option;
- Three consecutive descending candles at the top of the uptrend – "Three falling Crows" and open the PUT-option;
- Short or missing candle shadows.
- All patterns show only the beginning of a trend change and, despite the positive usage statistics, cannot be the final confirmation of the continuation of a new trend. Use for this additional technical indicator or paid binaries options trading signal, such as vfxAlert;
- Pattern formation should be preceded by a strong trend or a long period of consolidation;
- If the opening and closing prices are different, the closer to the middle of the previous candle opened "soldier" or "crow" the stronger the signal;
- The second and third candle necessarily must be roughly are identical on the magnitude, as on the body, so and on shadows. Otherwise, it is better to skip signal;
- When moving to the next higher timeframe, all three candlesticks merge into one ascending or descending.
- Expiration time is determined according to the timeframe used, it is recommended to choose values within 5-7 bars for timeframes up to M30, and 10-15 from H1 and above;
- If you count the expiration, see how many candles on average until the last local max/min. Remember that we open a trade on a trend that can last long enough. It will not be very good if it closes at the beginning because of the "short" expiration.
- Indicators of volumes, including tick ones. Both figures are widely used in the VSA (volume spread analysis) technique. A sharp increase in volumes simultaneously with the appearance of candles indicates a strong interest in the market to change the current trend;