Binary Options Trading for January 6, 2014

Trading is now in full swing again after the low volume from holiday-related vacations in late-December/early-January. The markets are back to behaving the way they usually do, which tends to make for good trading.

The Swiss Franc (CHF) gained ground against the USD during Monday morning’s trading. The trend was down overall until the New York session opened. The pair made an early morning high of 0.90640, before falling down to 0.90484 (denoted by the top and bottom red lines in the first image below). Price retraced back up to 0.90610 before falling back down below the 0.90484 support level.

I actually briefly considered a put option trade on the 3:50 candle (after the rejection of 0.90484 and doji formation on the candle before). But I passed on it being 0.90484 had only been broken by four pips. I would have preferred a breach of 5-10 pips to consider a put option there.

I did, however, find a trade over an hour later on the 5:10 candle at that same price level. Price rejected 0.90484 on the 5:00 candle and re-touched on the 5:05. I did not take a trade on the 5:05 being there had been some bullish momentum on the previous candlestick. I wanted to make sure that a break back above 0.90484 wasn’t imminent. But the 5:05 turned out to be what could best be described as a “bearish doji” or “shooting star” candle, and told me that 0.90484 would indeed be a good place to take a trade. So I took a put option at that price on the 5:10 candle.

This trade worked out perfectly and continuously fell in my favor for an eight-pip winner by expiration.

Over the next two hours, price created a simple valley type of pattern on the chart. The USD continued to fall, bottoming out at 0.90342 before rising back up to 0.90484, which was turning into quite a strong level to take trades. Price came up and touched 0.90484 on the 7:20 candle and fell again on the 7:25. So I decided to take another trade on the touch of that level on the 7:30 candle.

At first, a break of that level occurred, but it turned out to be a simple false break. When false breaks occur, however, it’s typically a sign that price is likely to permanently break above that level in the future. Consequently, you always need to be careful when considering that level in future scenarios. The potential weakness of 0.90484 going forward was further validated by the weak retracement back down. I did win this trade by three pips, but after this price began to climb above 0.90484 to the point where new daily highs were made before the U.S. market open, as the USD regathered its losses against the CHF.

Overall, though, two trades and both in-the-money. Both were taken at the same exact price level, which is a pretty constant theme in my trading. Sometimes I’ll be trading the same level over and over again if circumstances still support further trade set-ups at that price.

In any given market, over the course of a single trading session (eight hours or less), there tends to be anywhere from 1-4 price levels that I truly feel could support trade set-ups. Therefore, my trading time is basically spent watching price interact between these levels while still accounting for the formation of new support and resistance in the market – especially if new daily highs or lows are made. I feel that zoning in on these key areas alone allows me to greatly simplify and “de-stress” the trading experience for me. Trades are never ever taken on a whim. By looking at key support and resistance levels in the market only – from previous price history, or through the use of pivot points or large-scale Fibonacci retracements – I already know where in the market I may potentially take trades. When price does reach these levels, it’s really up to me to analyze the set-up scenario to see if it’s worth taking.

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