You should always use technical analysis as a means of arriving at accurate price movement predictions for binary options trades. You need to study the historic data available in relation to a specific asset that you want to trade in. For you to understand and even anticipate future price movements you need to acquire a complete picture of past price patterns.
However, before you start utilizing this type of analysis you first of all have to recognize the fact that technical analysis solely focuses on asset price movements and similar information. It does not in any way account for analyst’s opinions, market sentiment, any form of emotion, or rumors within the marketplace. To determine these you need to conduct a fundamental analysis, which is also extremely important to all binary options traders.
Use Historical Technical Analysis to Predict Future Movement
The most basic technical analysis is based on the simple fact that history often repeats itself and thus you can expect past price patterns to somehow predict future patterns. Knowing this, the primary objective thus becomes the ability to recognize trading opportunities using past patterns.
Experienced traders already know that prices will often move in certain patterns and even more erratic and volatile movement has some form of pattern. Technical analysis used together with a binary options strategy gives any trader more control – allowing him to make good calls, wise investment decisions and also enables him to enter the market at more opportune times.
Use Technical Analysis Charts to Detect Future Asset Price Patterns
There are a couple of charts which you can use to detect future asset price patterns. Candlestick charts, for instance, can be used to display highs and lows as well as opening and closing market prices for specific time periods. The distance between the closing and the low point is the tail while that between the red bearish candlestick and the high point is the wick. At first glance, all this might seem confusing, but it shouldn’t take you long to master their use.
Candlesticks have been used for decades and they have time and again proven to be incredibly helpful technical analysis indicators. Their use over the years led to numerous price patterns discoveries, with each providing traders with all manners of clues of upcoming price movements. You should however keep in mind that the best success when using candlesticks is realized when you use them on charts that have a time frame of a day or longer.
Another excellent technical analysis tool to predict price movements is the use of bar charts. These also show high, low, closing, and opening prices of selected underlying assets. As such, you can use bar charts to spot patterns that you can use for prediction of price movements.
Overall, regardless of the tools used, technical analysis always comes in handy whenever you want to predict price movements that will enable you to make smart investments.