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.