Binary Options Trading at Boss Capital for June 23, 2014

The EUR/USD was in a downtrend for Monday morning. It made about a forty-pip down move, spanning three pivot levels. (Also, before I move on I should say that I don’t have any idea what that solid yellow line is doing on my chart. I deleted all my drawings and it wasn’t a Fibonacci retracement line, so I really don’t have any clue what it was from and for whatever reason I couldn’t get rid of it.)

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I do not believe I’ll be doing any very early-morning trading, but I first wanted to discuss the potential trade set-up that had happened back at around 4:05AM EST. Price had hit the support 1 level of 1.35906 and bounced off, signaling a potential level of support on which to base call options, and re-touched on the next candle.

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But I would personally have to contend that this isn’t necessarily a very strong set-up here. First, the downtrend was quite pronounced at this point. And if there’s ever been a proven trading strategy that has been historically shown to produce strong results, it’s trend trading. Flouting the trend is never a great idea.

I’ve drawn in a trendline in the chart above to demonstrate the general magnitude of the downtrend at this point. Even if you do have a decent price action and support/resistance set-up, you do need to be careful about where the pair wants to be heading. I’ve never been the type of trader to hop in with the general direction of the trend, as that isn’t my trading preference and I simply haven’t been able to trade successfully that way. But going against a trend even when you expect a certain price level to introduce congestion into the market is often a bad idea. I didn’t have to make this decision live, but this is simply an example of a trade that I would not take even with the general set-up guidelines that I have. Taking into account the context of the market is very important as well.

As for today’s trades, I was focused on the potential put option set-up at the 1.3600 level. Not only was this a whole-number – which often serve as S/R levels themselves because banks and governments do pay attention to such levels – but this was also where the daily pivot point sat for the day. It represented a great point of confluence; namely, three factors supported trade set-ups here – the overall net downtrend, the daily pivot level, and the whole-number itself. A price-action confirmation would turn this into a pretty high-probability put option set-up if it could turn out that way.

I was actually able to get into two trades on this level. The first one came on the 8:15 candle. Price came up at touched 1.3600 on the 8:05, promptly rejected, formed a doji on the 8:10 with minimal movement, and came back to up touch 1.3600 on the 8:15. On the chart, it might actually appear that the 8:15 candle stopped just shy of 1.3600, but it did come right up to 1.3600 exactly. Also, when I trade, I don’t really look at the candlestick itself when trying to get into my entry. I know exactly what price will be my trigger; hence I look at the price in the sidebar instead. This closed out in favor.

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My next trade came right at the touch of 1.3600 on the 8:40 candle. I was less confident about this trade given the somewhat weak retracement back down to the support 1 level. It would have been nice if it had traded back down around support 1. When it doesn’t return back down to a previous level of support, this often suggests that momentum is in the upward direction given that there weren’t enough sellers to get it to revert back to a recent trading level.

As soon as I got into this trade, it ventured in my direction by around seven pips and I thought I had another winner. Unfortunately, it started coming back up and in the final minute went back above my entry level and closed out-of-the-money. In the span of several hours, price was above 1.3600 for a matter of a mere couple minutes. To my disbenefit, these couple minutes happened to coincide with my expiry time. But oh well. Trading can certainly feel “unfair” sometimes.

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At the end of my trading session, I had considered a trade down at support 1 (1.35906). However, price had formed a line of congestion just two pips above that level. Consequently, if I had taken that trade, it would have been risky in the sense that it could run into a potential ceiling just two pips above entry. A trade always needs more breathing room than that, even if it’s open for just a few minutes. Moreover, I actually wouldn’t have been surprised if it fell below support 1 to the potential support level around 1.3585 created from previous price congestion just before 7AM EST.

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