Trading EUR USD Forex Binary Options – A Strategic Analysis of a Bullish Market
Trading EUR USD Forex Binary Options – A Strategic Analysis of a Bullish Market
June 21, 2012Today I will be looking at the Candlestick patterns and trying to formulate a Forex trading strategy on the EUR/USD exchange rates. Chart A represents a Harami Bullish pattern.
Harami translates to “pregnant” in Japanese. This specific Bullish Pattern is usually characterized by its small white body contained within a previously longer black real body (for explanations about bullish and bearish markets please refer to our strategy section located at the top menu of the home page). The long black candlestick is referred to as the mother and the smaller one is also known as the baby (my friends call it the child).
Chart A
The secondary smaller candlestick represents a strong reverse signal. Sometimes traders recognize similar patterns in the cup with handle. Its clearly visible that the gradient edges of the secondary candlestick are not necessarily contained in the first’s candle’s body, but it would have been better if they were.
As we progress we can see the reversal pattern. There’s a long and black candlestick at the low end of the downward trend, with a white candlestick opening higher or at the the same level of the previous candlestick’s close level and then closes at or around its opening point.
The Harami Cross indicator is more definite than the basic Harami indicator, and signifies a reversal for the bulls.
Diagram A
The smaller the second candlestick, the stronger is the reversal signal.
The shadows of the second candlestick do not have to be contained within the first candle’s body, though it’s preferable if they are.
The Harami Cross represents a trend indicated by a larger candlestick which is then followed by a “Doji” (See Diagram A) which is located within the top as well as the bottom of the candlestick’s body. We can learn from this that the previous trend will start reversing. This is extremely important when you want to trade 60 second options on binaries.
In this context, we can asses that the moving averages (not graphically displayed in this post) indicate a strong buy recommendation, alternatively the Fibonacci Pivot indicates the same.
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