Trend Continuation Chart Patterns in Binary Options Trading

Technical analysis is based on chart pattern recognition. This is the foundation of understanding binary options markets. They aim to identify major market movements and link different market phases , including uptrend, downtrend and sideways. Binary Options chart patterns are therefore important to understand.

There are many charting patterns that can be used to analyze financial markets. However, the most effective ones work best binary option trading . These charting patterns can be used as a trading strategy, or backed up with technical analysis indicators.

What is a chart pattern?

After years of watching the market, many people have noticed that it moves in repeated patterns. These patterns can be seen on the charts and used to predict future price movements. Some patterns signify a trend reversal while others indicate continuation.

  • A continuation pattern means that the trend continues in the same direction even after a brief pause.
  • A reversal signal indicates a change of trend direction.

Let’s take a look at the most popular trends for continuation.

Binary options trading trends continue

Triangles

When the price doesn’t know which direction it should move, a triangle is formed. This pattern is a sign that there’s a conflict between bears and bulls.

There are many types of triangles.

Triangle of ascension

After drawing the trend lines on the minimums and maximums , an ascending triangle points upwards. The price’s upper resistance line is normally horizontal or slightly upward in this instance.

A triangle breakout usually results in a price increase . However, it is possible for the price to reverse.

  • Wait for the first candlestick that closes outside the upper triangle line.
  • Trade in the direction of price breakout.

Triangle descendent

An ascending triangle functions similarly to a descending triangle except that it is directed downward. The resistance line at the lower end is either horizontal or pointed downward. These triangles are most commonly formed in the direction.

  • Wait for the first candlestick that closes outside of the bottom line to move in the downward direction.
  • Trade in the direction of price breakout.

Symmetrical triangle

A symmetrical triangular is horizontal. The trend lines for such triangles are directed towards their center. The trend direction before the formation of the triangle is the most common way for the breakout to occur.

  • Wait for the candlestick outside to close.
  • Trade in the direction of price breakout.

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Flags

The flag chart pattern is formed after a sharp price move in any direction , followed by a brief period of stability, which continues the trend. It looks like a flag (a rectangle with a flagpole).

Bullish flag

The bullish flag pattern begins with a large green candle (the pole), followed by the rectangular “flag”. The bullish trend is confirmed when the flag breaks in the upward direction.

  • When a candlestick is closed outside of the triangle in the same directions as the “pole”, enter the trade.

Flag of the bear

Similar to the bearish flag, it begins with a red candle and confirms the downward motion after a brief break.

  • When a candlestick is closed outside of the triangle in the same directions as the “pole”, enter the trade.

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Pennants

Pennants function in the same way as flags. They start with a bullish or bearish “pole” candle. However, their “flag”, which is not a rectangle, is a triangle, or wedge. There are no other differences in the readings.Example of a bullish pennantExample of a bearish pennant

Tip: Patterns are dependent on momentum. Expert traders don’t recommend opening orders until the pattern has formed completely. Don’t open any orders if a chart pattern doesn’t look like either a triangle nor a flag.

Summary

Chart patterns are useful in understanding the logic behind binary options markets. While there is no guarantee that a particular pattern will work for you, it is enough to make use of the patterns in trading.

It might seem difficult at first to find these patterns on a chart, but you will become more proficient as you practice. Use the Practice balance to learn how to use graphical tools to locate them faster. You’ll soon be able to see them with your naked eyes, making it easier to make decisions.

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