I found a trade right off the bat on Friday on the EUR/USD. I love it when I have Fibonacci retracement lines in play for binary options trades. I always draw them on the daily and weekly charts and they represent the same levels I use in my forex trading. I redraw them when a new high or low is formed in the market outside the existing Fibonacci lines. They tend to provide great set-ups on both forex and binary options trades and you will tend to see at least a bounce or two as the banks test the liquidity at those levels.
Price touched on the 1:10 candlestick and I took a call option on the 1.30727 level on the 1:15 candle while price was holding steady at around that level. The trade didn’t show much movement at all for about the first ten minutes before finally showing a bit of a bounce off the level on the closing candle for a three-pip winner.
The market got back down to the 38.2% on the 1:55 and 2:25 candles, but I did not take a trade at either of these points, even when it touched the Fibonacci on the three consecutive candles after the 2:25. I realize many would hop on this trade – otherwise risk missing out – but for me it’s not a trade-able set-up. In this case, I was content to take the first set-up on the 38.2% Fib and leave it at that. Price had been downtrending for the morning (see screenshot after the next paragraph) and based on that price action, it seemed as if a break of the 38.2% Fib would come soon enough.
Even a level that strong will eventually give way if the market suggests that it wants to go lower. The downtrend was one clue, followed by the fact that on the first touch of the 38.2 as a support, it only retraced back up by six pips. On the second bounce, it retraced up by only five pips. It just too risky to be taking subsequent trades on the level when all signs point to a breach of the Fib. If price had retraced back to that day’s pivot point of 1.30873, only then I would possibly reconsider call options at the 38.2% Fib if the right trade sets up. But you definitely need to be careful of being overly eager to trade these levels. Yes, it represented a strong level of support, but if you’re not cognizant of how the market may be acting in relation to where these price levels are (notably, trend direction and price action), then you’re likely going to be taking a lot of unnecessary losing trades. My trading is based around support and resistance, but I also consider multiple other factors when considering whether a set-up is worth taking as an actual trade.
Once price finally broke below the 38.2% Fib on the 2:40 candle, I began targeting that level (1.30727) for put options. That would have been a very strong set-up given that it would have been a retrace back up to a solid level of resistance in the context of a downtrend. In fact, I likely would have considered taking a put option on just the touch of the level instead of waiting for an initial rejection. But price never got back up there and continued to fall all the way until 1.30363, when it finally reached another notable level of support in the maret. I was expecting the market to possibly reach all the way back down to perhaps the 1.30116-1.30146 area, which represented lows from Thursday’s trading session, before maybe seeing some type of bounce. The market stayed in a bit of a sideways pattern for the next three hours, never giving me anything I was interested in trading.
Price finally broke below 1.30363 just before 7AM EST, but retraced back up to 1.30363 shortly thereafter, using previous support as resistance. I did not enter into a trade right away, although I contemplated taking a put option after the 7:20 green hammer candle. But I did get into the put option trade at the level on the 7:40 candle. This turned out to be a great trade, closing as a 12-pip winner. Overall it was a solid set-up, taking a put option on a pullback to resistance within the context of a downtrend.
I stopped trading right after the end of that trade, expecting that set-ups would likely be few and far between going forward. But I ended up with a fantastic week, going 11/12 ITM, one of my best ever, especially in terms of ITM percentage. Those twelve set-ups came after about thirty hours of watching a single asset and patiently waiting for only the best trades to come my way. Patience takes time to develop, but it will come if one finds a strategy (not a “holy grail” or special indicator) that has been shown to work over much time and many trials, and so long as the initial thrill of trading that accompanies new traders finally recedes.