In this article we will familiarize our readers with another one pretty interesting binary options’ indicator Price Channel Upper. Essence of this indicator consists in the fact that all market’s movements move round the moving average. Any deviation from this line is called volatility. In other words, all market’s oscillations, as a result, are striving to their middle value.
Price Channel Upper binary options’ indicator and its description
This indicator is very similar to the previously described another tool of the technical analysis that is called the Bollinger Bands. This one is also based on the Simple Moving Average indicator. In this case, any of them can be used. This indicator’s name originates from the main point of the market’s movements. There is the certain average line (it is well displayed by the moving average) and oscillations away from it.
Therefore, a channel, which extends and narrows occasionally, appears on the indicator’s chart. A price stays within the bounds of this channel. There is the moving average in the centre of this channel, and it defines the main movement on a chart. And some sort of the price envelope turns out to appear.
When the oscillations become stronger, envelope’s side lines begin to extend. It shows that the volatility is growing in the market. Therefore, you have to prepare for market movements.
It is assumed that if a trader chooses the indicator’s parameters appropriately, then, as a result, this envelope will show the balanced condition of the market. For this reason, if a price exceeds the channel’s bounds, you can consider the purchase of the Put or the Call options.
Trading signals of binary options’ indicator Price Channel Upper
Those who have read the previous article’s section attentively will manage to determine the trading signals on a chart easily. This is because this indicator is very similar to the binary options’ indicator Bollinger Bands. The essence of the indicator’s usage consists in a fact that it helps to find signals for work, taking into account local levels of support and resistance. Basically, the channel’s bounds turn out to be these levels.
The first thing to do after this indicator is set on a chart is to adjust it. We will not recommend any settings, because every trader has to select them depending up his needs. For this reason, we will not consider this subject.
So, how to work with this indicator?
Everything is pretty simple here. Given a fact that the channel’s bounds act as support and resistance levels, you can trade based on this fact only. For example, the price of an underlying asset has come close to the bottom bound of the binary options’ indicator Price Channel Upper. In this case, it is necessary to attentively monitor the indicator’s and the price’s behavior. If a rebound occurs, a trader can buy the Call option because in this situation probability of the price to move in the direction of its balance, in other words, in the direction of the moving average, grows substantially.
When a price is near the top channel’s bound, a trader may also need to monitor both binary options’ indicator and price’s behavior. If a rebound occurs, the probability of the price to move in the direction of its middle values grows. Therefore, you may buy the Put option at this time. As you can see, there is nothing complicated about the work with this indicator. The only one formula for a success is to use adjustments that have to be done when the indicator is set on a chart. As a result, you will be able to test the indicator’s work.