Technical Analysis for Binary Options

Identifying potential reversal areas is key when trading binary options. You'll want to check for potential support and resistance levels – such as recent high and lows, trend lines, fibonacci retracements or pivot points.

Trend Lines

One of the simplest technical analysis tools, trend lines can help you identify trends, support and resistance, as well as potential chart patterns. When trading hourly options, use a trend line to forecast the price level ahead of time. Trend lines can also be used to verify a reversal when the line is broken at the end of a trend.

Chart Patterns

Using multiple trend lines can reveal potential chart patterns such as triangles, wedges, flags and pennants, double tops/bottoms, or the head and shoulders pattern. Look for a price breakout outside the trend lines in the direction suggested by the pattern.

Pivot Points

Pivot points are a classic tool used by floor traders to identify potential daily support and resistance levels. Many charting packages have a pivot point indicator, and daily pivot point levels are posted on many websites. You can use an online pivot point calculator to calculate these levels for any currency.

Fibonacci Retracements

Fibonacci levels are based on the observation that price reversals frequently occur at predefined ratios. While not always accurate, you will occasionally see reversals occur at important fibonacci retracement levels, such as 61.8%. If you see a clearly defined reversal right at a retracement level, then you can treat it as a confirmed support or resistance level. Almost all charting packages have a fibonacci drawing tool.

Oscillators

Indicators such as stochastics and RSI are helpful for identifying overbought and oversold areas where a reversal may be imminent. Look for a confluence between extreme readings on an oscillator and potential support and resistance levels as defined above.

Fundamental Analysis for Binary Options

While technical analysis can be useful on hourly options, it's always a good idea to check the fundamentals of the asset you are trading on, as well as being aware of economic news releases that can cause price volatility.

Forex news sites such as FXStreet and DailyFX provide up-to-the-minute news and expert analysis. It's a good idea to confirm your analysis against expert opinion. Both sites have technical analysis reports, as well as expert commentary and analyst sentiment.

It's also important to be aware of economic news releases, as these can present valuable trading opportunities. (They can also ruin a perfectly good trade if you're not aware of them). The above sites have detailed economic calendars to help you identify potentially volatile news events.

Prices can move dozens of pips in a short time after an important news release, so you can book an easy profit on an hourly option as long as the price keeps trending. For Nadex and IG Markets, you can place a pending order at a favorable price, or buy an option cheaply at market price in the hopes that it will move enough to close at a profit.