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Trading Strength in the Markets

No matter what happens in trading it is always better to trade the strength and not get left behind. Today we saw a EURUSD move up in a nice stair stepping pattern with some nice consolidation. There’s always a time when you need to consider a put option after a significant move in one direction, but in this case we were just around the pivot and there was plenty of room for the price to move up even more. We had seen the price move around 40 pips within about 30 min. We decided to take a call option after a recent consolidation area and the price ended up being two pips above our strike price.

Any time price moves in one direction or the other and you haven’t reached the far resistance or far support levels you normally want to stick to the direction the price is moving. This doesn’t mean that the price wouldn’t reverse directions on you, but it also gives you a little bit more confidence when taking your trade. In binary options we try to find the quickest entry and exit price that we can find based on the model we are looking at. In this case consolidation and strength were on our side.

The image below shows a trade that could have been taken had you traded the resistance one level this morning. The price had moved up over 27 pips in 4 min. right into the resistance level. Had you traded this resistance point you would’ve been in quite early on a 15 min. expiration trade. Although the price moved against you the closing strike price still ended below the entry which was right around the resistance level. Not the cleanest of trades when it comes to resistance points, but this is one of those cases where strength still was King and you need to be quite cautious when trading a reversal trade against a strong market. This doesn’t mean you should take these trades all the time but we did see that extended four candle play that gave us a little bit more positive ideas of whether to take this particular trade or not.

Taking Resistance Trades
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