Binary Options Trading for June 20 and June 21, 2013: 5/7 ITM

I took three trades on Thursday, June 20. I started watching the markets around 2:20AM EST and right away the first support or resistance level that stood out to me was support at 1.3248, where price had seen two bounces there in the hours earlier. Sure enough, ten minutes into my trading session price hit 1.32481 and rejected the level and closed back above. So on the next candle I took a call option on the touch of 1.32481. The trade looked good at first, but it eventually closed out as a half-pip loser.

Price continued down below 1.32481 so I immediately began looking at that area as a place for put options. On the 2:55 candle, price went through the level (false break) before closing back down below. I did not take a put option at 1.32481 on the next candle because I was wary about the false break that had occurred on the previous candlestick. In my experience, false breaks at an area of support or resistance usually signal to me that price is likely to break through at some point in the future. But the following candlestick after the false break looked very favorable for a put option set-up, at least in terms of price action. Price hit 1.32481 on the next candle, so I decided to take a put option on the 3:05 candle, needing just a short-term bounce as the trade would expire on the end of the next candle. I expected price to get down to the yellow support 1 line anyway. Unfortunately, price broke through the level right away and never looked back, turning out to be nearly a twelve-pip loser.

Price did eventually get down to the support 1 line, but I was reluctant to take call options there even if something favorable set up, as a support level had formed just five pips above it earlier and could serve as resistance on the way up.

The USD continued to make gains against the Euro throughout the morning. Fundamentally, this could be attributed to the fact that the U.S. Federal Reserve had announced that it may be likely to scale back it’s quantitative easing program in the coming months, which would lead to a stronger U.S. dollar. Since price was continuing to go down, I decided to limit myself to put options only, in order to follow the downward trend unless something very, very good set up as a call option.

Eventually a put option set-up came along at around 5AM. Price came up and rejected the recent resistance level of 1.32239 (bottom red line in the image above). Price did not touch on the following candle, but I decided that I would take a put option on the touch of the level if price action still favored the trade. Price did eventually touch 1.32239 on the 5:10 candle, and I hopped on the put option for a nice 15-pip winner to close out Thursday’s trading.

On Friday, I started watching the market just after 2:30AM EST. Right away, I had two main price levels in play for potential trades. My first one was just above where price had been currently trading at – namely, 1.32455. Ideally, I would have liked price to retrace back down a bit further from the formation of the resistance level there. In my experience trading binary options and forex, I’ve found that when price retraces back down from resistance into an area of previous price congestion, it helps to solidify the validity of the level. If a retracement is weak and goes back down from resistance only slightly – not into an area of previous price congestion – that tells me that the market simply might be taking a short breather before another wave of buying comes in and pushes the market above previous resistance. The opposite, of course, would be relevant toward support levels.

Regarding the potential put option set-up, the retrace back down from the initial formation of the resistance level was adequate for me to consider it as potential put option territory. It had retraced back down by about ten pips and had gotten into an area of previous support and resistance from earlier that morning. The put option eventually did set up to my liking. It touched the resistance level of 1.32455 on the 2:30 candle. Price rejected the level and I took a put option on the re-touch on the 2:35 candle. The trade won by about five pips.

The pivot level did not provide any call option set-ups. Price went through it strongly at around 3:15 and eventually formed a bottom at 1.32113 before heading back up to the pivot. Therefore, at this point I had the pivot level in play for put options and 1.32113 available for call options. The pivot level did hold just before 4:00 but no put option set up exactly to my liking so I took no trades there at that time. My next trade occurred about an hour after that on the 1.32113 level. Price touched and strongly rejected the level on the 5:10 candle, and therefore I took a call option on the re-touch on the 5:15 candle, which rode out to be a two-pip winner.

My final trades of the day came back up at the pivot level. Price came back up and rejected the pivot once again so I took a put option at 1.32265 (pivot level – purple line) on the 5:55 candle and had a six-pip winner by expiration. Since this was such a solid set-up and the pivot was holding very well repeatedly, I took a subsequent put option at the pivot on the 6:10 candle, which produced nearly a three-pip winner. I had several things working in my favor on these final two trades:

1. trend was down for the morning

2. pivot level

3. previous support and resistance at the level earlier that morning

In other words, I had a high level of “confluence” going for me, or multiple factors supporting a single trade. In situations like this, I’d estimate that one would have an 80%+ chance of winning the trade.

It was a great way to close out the week. I would also like to say that I have been very happy with my new broker,, thus far. I have not executed a withdrawal yet, but I’m happy with their platform software, pay-out on the EUR/USD, and I am getting in at the prices that I choose and haven’t had a single bad price fill yet. If anyone is looking for a new or alternative broker, especially for U.S. traders who might be more limited in their choices, I would definitely recommend Trade Rush.

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