Main figures of technical analysis

• VFX Blog
• For beginners

If you want to understand the market situation clearly, you should apply the visual assessment of the graphical figures of the technical analysis. Such type of analysis provides more precise data than indicators because they function on programmed algorithms and binary option bot. In most cases, you can work with Japanese candlesticks.  

If you want to know how to make money on binary options, it is necessary to learn more about the graphical figures that are used in trading. Graphic patterns are separated into two types.  Reversal patterns show the changing of the current trend. Other patterns confirm the continuation of the trend when after the insignificant consolidation or correction price moves in one direction. Some figures are simple, and they are easy to identify on the chart. However, don’t forget about the rare figures, such as Diamond or the ZUP starter complex (Gartley “butterfly” and Pesavento). 

Head and Shoulders

This figure can be identified on any asset and timespan. "Head and Shoulders" pattern consists of the three consecutive local maximums/minimums. The center and highest sides are the "Head". At the minimum, there is a level of support, and this is called the "neck." The smaller sides are called the "Shoulders".

• The uptrend emerges.

• We are waiting for the figure to appear. The left shoulder is the first local maximum. Then we are expecting the fall in prices with a synchronous drop in volumes. This fall affirms that the balance of forces is transferred to the sellers. When the correction is finished, we receive the start point for the “neck” line.

• The trend continues. Now we have obtained a new maximum or “head”. This maximum should be higher than the first one.

• The right shoulder is created similarly. In the standard version “shoulders” are identical, but in reality, such situations don’t happen often. If the right shoulder is bigger (in amplitude, not information time) it makes a signal stronger for the end of the uptrend. We are waiting when the last point or signals on the "neck" line will appear.

• Take Profit is situated at the maximum point of the right “shoulder”. You see the highest calculated value. However, always look at the current state and follow the binary option trading signals, it may be necessary to use a trailing stop to close the transaction earlier!

• These patterns appeared for a long time. Positive results are seen on the timespans M15-M30;

• The main component that confirms the binary options strategy is the correction in market volumes. They should grow on the sector “Left shoulder — Head” and fall in the “Head — Right shoulder”. Also, the volumes begin to increase at the moments which are presented as the intersection of the neck;

• Don’t open the option without approving the breakdown or rebound on the support line. Also, you don’t need to seek at all costs for the “Head-Shoulders” where there are practically none.



Ascending. The maximum horizontal upper border at closing prices functions as a resistance level, the point of intersection (top) and the trend are pointed upward on the pattern, the inclined lower (support) also is pointed up. You see, that diapason of price impulses is decreasing. The breakdown of the high limit shows the continuation of the uptrend. According to the principles of market analysis, behind it are pending BUY orders and the deals of the binary option trader.

Descending. In this figure, you see the opposite situation. Now the top is at the bottom. The lower boundary is the resistance level, the top is the support. The range of fluctuations is diminished. Now borders are situated at the closing prices of at least three local lows. We need the resistance breakout to continue the downtrend, where we can find the pending SELL orders.



Symmetrical. These triangles are part of the group of neutral patterns where the boundaries narrow at roughly the same angles.  There is often enough to affirm the temporary equality of powers between bulls and bears, the same probability of a breakdown, both on the rise and fall. Statistical information confirms a slight advantage in the direction of the first pulse, you can set two multidirectional pending orders. Follow the situation to move or cancel the order timely. In another case, you can get into the "castle", from which it will be hard to get out without issues.

Expanding. The lines of the figure disperse, regardless of the angle between them. The binary trading platform displays overbought or oversold. Market makers almost stopped to trade, only speculators influence the price movement. Even small changes in volumes cause unpredictable significant fluctuations. It is better to leave the market or if the width of the triangle allows you to work with short-term swing positions. The breakout of the boundary needs obvious confirmation from oscillators and indicators.

«Wedge». This figure appears when there are only small and medium speculators on the market. In this situation, the price can move both down and up even with an insignificant change in market volumes. “Wedge” can be hard to identify, because visually this pattern looks like a standard tapering trend channel. “Wedge” shows a continuation during pullbacks and corrections. If it is directed towards the trend, it will be a reversal signal.



Only long-term and medium tendencies can form the "wedge" fully. Then it is usually worked out correctly with many assets. The trading on timespans below H1 is not recommended because there are too many signals. Since the model points to a complex market, other patterns may result, such as more stable versions of triangles.

Analysis features:

• In most cases, the breakdown takes place in the area from the middle to 70% of the length of the horizontal level;

• Triangular patterns should only include an odd number (at least 5) of waves to be considered fully complete. Don’t work on the market until this condition is fulfilled!

• Volumes are to decrease with a sharp increase near the breakout level, as the rate of price movement falls down. We monitor the dynamics, there may be outstripping signals!

• Breakdown of an ascending or descending figure against the main movement in the most situation will be false;

• Newcomers are not recommended to trade inside triangles, particularly for free binary signals.

“Pennant” and “Flag”

These two more figures appear after a period of incertitude. Usually, in front of “flag” and “pennant”, you will see a sharp increase or fall. This sharp movement will be affirmed by the significant volumes. There are also strategies that consider these figures as the signal for important events. If the breakdown goes against the current trend, this news could be worse than forecasts.



Features of formation:

• On the chart the figure "pennant" looks like a triangle without slope;

• The minimum period during which the figures of 10-15 bars of the working timespans are founded;

• Evident start impulse, often with a price (gap);

• There is a visible "flagpole". The"flagpole" is situated up at a large angle of the chart between the beginning of the figure and the first breakout of the support/resistance level;

• "Flag" is a sideways movement. This movement can be horizontal or pointed against the actual trend (down for an uptrend and up for a downtrend). 

• Take Profit is computed by the flagpole. Pending orders are situated behind the last peak. On the half-length, it is recommended to close part of the position or to minimize the financial losses. 

“Flag” and “pennant” have appeared during periods when the market makers are out. They are more trustworthy than triangles. That’s why when you make the first steps into the trading world, you can first learn to identify these figures. Then, you can move to the complex patterns. Irrespective of the strategy and binary signals, you need to remember the rule: a sharp rise of fall happens before sideways movement.

Rounded top and bottom

These figures are used in long-term and medium-term analysis. They suit for the quieter trade. Such movement of the price shows the increase in the volume and quantity of pending positions of major players against the trend. This means that they will close in the next 2-3 months. 



You can see these figures mostly on weekly and daily timeframes. Assets are necessary to have medium or low volatility, without frequent speculative movements. If you want to define the strength of the trend and the moment where it changes, apply the Fibonacci levels. On big timespans, they provide trustworthy reference points for coming pullbacks, changes in price support, and resistance.  Also, you can use them as the base to trade on the short timespans.

Complex figures of technical analysis

The previously described figures are classified as "simple" so in term of technical analysis they:

1. Show up when the market is in a state of incertitude, such situation happens even during periods of strong trend;

2. Determined only on the chart without the use of supplementary instruments.

Newbies should only apply simple patterns or binary options signals, with the addition of moving averages and oscillators such as RSI or MACD!

When you learn to identify the simple figures, you can move to the more complex patterns. This may require a certain time and experience. 

Experienced traders can use more complex patterns, such as "Butterfly Gartley" and "Diamond". Let’s talk about them. 

Butterfly Gartley

This reversal figure bears the name of its author Harold Gartley. Butterfly Gartley is based on the Fibonacci sequence. In the black section, the black segments display the movements of the market, the scarlet ratio of Fibonacci levels to the distance that the price has passed between the levels. There are special indicators such as ZUP which simplify the construction and analysis.   





During the formation, all Gartley figures are very unsteady, but when the model is completed, the certainty of the binary option trading signals goes to 85%. The first Take Profit is always worked out, especially on H1 and higher timeframes. In the process of assessment, look at possible "butterflies" at shorter intervals, this really increases the trustworthiness of the opening point.

Diamond (Rhombus)

This pattern doesn’t show up often in the Forex market. However, it can give you a significant profit. Comprised of expanding and symmetrical triangles with common tops, it turns out a double meaning: on timeframes from D1 and above it indicates a trend reversal, on smaller ones this is a continuation.



“Diamond” figure provides accurate entry points. However, such a figure needs a long time to form.  It is necessary to wait until the end of the figure, which may look like “Head and Shoulders”, but in this situation, the entry point is probably false. Stay calm; do not let the market fool yourself!

All exact binary options strategy with technical analysis figures submit the principle — one tool can’t be used to open a transaction, you need the additional confirmation. For visual analysis, it means the use of overbought/oversold oscillators, trend indicators, and candlestick patterns of a smaller order. For example, if the first Head-to-Shoulders correction ends with a pin bar, it can cancel out all graphics.