Technical Analysis

Technical analysis pertains to the reasoning that past trends will repeat themselves. The price of an asset will fluctuate, and patterns seen in its historical behavior are likely to take place again. Therefore, analysts use indicators and many other analytic tools in an attempt to decipher clues about a recurring trend, and thereby successfully predict the asset’s upcoming behavior. Technical analysis uses many indicators of market behavior that provide pivotal information regarding the future direction of the price of an asset. The use of historical data and additional indicators, combined with fundamental analysis, can create a successful trading strategy that can inflate a portfolio’s returns.

Support and Resistance

The most commonly used mechanisms of technical analysis are support and resistance levels. These lines act as direct indicators of past trends around similar prices of an asset. As an asset falls into a pattern that has previously been seen, analysts refer to the behavior that took place and project a similar trend for the near future. If an asset is appreciating, and it steadily approaches a resistance line, many traders will be wary of a trend reversal at that point. This is because based on past data, the asset reversed downward several times when reaching a price around the resistance line. Since technical analysis is based on the premise that historical behavior is likely to repeat itself, the conjecture that can be made here is that the bullish trend could be stopped around this level. These levels tend to be self-fulfilling, since many investors refer to them as indicators of value and use them to make trading decisions.

Relative Strength Index

RSI is one of the leading indicators of the plausible behavior of market conditions. The RSI uses a simple to understand concept that illustrates the relative strength of an asset at any given time. The strength varies based on the longevity of the position. Since Fixed-term trading are short-term investments, it is important to apply this indicator on a short-term chart in order to induce the most relevant and accurate results from its use. The index specifies to its users whether the asset is at overbought or oversold levels, and therefore what the appropriate action is for the trader. The indicator uses three crucial levels: 30, 50, 70. If the index approaches or is above the 70 level, the asset is considered overbought. This should bring about a downward correction, since the asset is currently overpriced as a result of high demand. However, when the index falls to around the 30 level, the asset is oversold, and a positive correction is to be expected. That would be a good time to buy the asset and expect an appreciation to take place. The RSI is a useful tool to traders of all levels, creating lucrative opportunities for short and long term strategies.


Fixed-term trading are directly affected by market volatility. When volatility is high, it is conceivable to use this information to yield additional profits. For instance, the one-touch Fixed-term trading is a contract between two parties regarding whether or not a particular price of an asset will be reached prior the expiry of the option. When volatility is high, the likelihood that the price will be reached is increased. Therefore, depending on several analytical factors, it might benefit the trader to enter a “touch” position, and project that the price will be reached. In the event that the price is reached, the trader will yield the profit that was agreed to at the time of entry into the option. Conversely, there are certain times of day, when volatility is on the decline. During those times, it is more logical to take the “no-touch” side of the option, since it is less likely that the market will move enough to reach the target price.

Leave a Comment

Contact Us - Terms & Conditions - About Us - Privacy Policy - Cookie Policy
General Risk Warning: Trading Binary Options carries a high level of risk and can result in the loss of your investment. As such, Binary Options may not be appropriate for you. You should not invest money that you cannot afford to lose. Before deciding to trade, you should carefully consider your investment objectives, level of experience and risk tolerance. Under no circumstances shall we have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to Binary Options or (b) any direct, indirect, special, consequential or incidental damages whatsoever.
en English