Binary Options line chart trading strategy explained


The line chart strategy in binary options trading uses the RSI indicator to identify overbought and oversold conditions. In this article, we will give you more insight into the strategy and provide you with helpful information on how to use it and apply it to your next binary options trading session.

Follow the given strategy to get a good grip on online charts while trading.

See our video about a line chart strategy with support and resistance:

Good to know:

  • The RSI indicator is widely used in binary options trading to determine overbought (above 80 RSI) and oversold (below 20 RSI) conditions.
  • A line chart strategy involves identifying candlesticks below 50 RSI, marking 50 candles to the left, and drawing vertical lines to assess overbought/oversold ratios.
  • Profits are taken by investing when the next 50 candlesticks reach the horizontal line drawn from the previous low point, with a typical example yielding a 65% profit on the investment.

What is the line chart strategy in binary options trading?

TradingView - Line chart trading

The line chart strategy in trading binary options is a methodical approach where traders use simple line charts for guiding the decision-making in their process of trading. In line with this approach, in a line chart, the asset’s closing prices are plotted on a continuous line to capture general price trends over some duration. Traders use this line to determine prevailing market trends: for example, an upward trend in the line indicates a rise in the asset price, which could be considered as a potential ‘call’ option, whereas a downward trend shows a fall in price and can thus be indicative of a ‘put’ option.

Line charts do also produce support and resistance levels which are critical toggle points where the price of the charted asset has historically been reversed its direction. These are indicator points that are very key in the prediction of future prices movements. Other than the two, continuous traders seek breakouts when the price moves beyond or reversals where the price changes its course to make strategic trading.

How to use the line chart in binary trading effectively?

As mentioned, the RSI indicator is the most used in Binary trading; it will be easy to explain through its standards. Other indicators will have the same function as this. You have to do the right settings here. Using 3 periods, RSI will be profitable for your binary trading.

Before you jump to the strategy, it is essential to know something about RSI. Suppose you have a condition where overbought and oversold are being taken under consideration. Then, you have to forward your steps cautiously.

If you are getting a condition where overbought reading is 80 RSI and oversold reading is 20 RSI. Then move forward; you’re then, again, getting the right signals according to 3 periods RSI. Let’s see the best strategy you can try.

#1 Finding less than 50

Line-chart-and-RSI-example

Finding out this portion is important as it will help you in the next steps. You can easily do this thing.

What you have to do is, spot the candlesticks lower than 50 RSI. Again go back counting 50 candles to the left side of the spotted bar. As both the end candlesticks are in your hand, it’s time for you to draw two vertical lines.

Draw the vertical lines on end candlesticks. This step will help you in counting the oversold or overbought ratio. Make sure you have spotted the end correctly by counting the candles from left to right.

#2 Find the RSI below 20

RSI-below-20
Finding RSI below 20

As you are done with finding the 50 RSI. Now you have to search for 20 RSI. Probably you have understood already that it’s a reversal trading strategy.

If you are thinking about what’s the purpose of this step, then read here. As you are looking back to the reverse signal, you can see it is a bullish reversal step. As the area is indicating the RSI range below 20, that means it is oversold. Again, as it is a reversal case, there will be a huge chance of being overbought in the future.

Doesn’t matter in which field ( commodities, crude oil, stock exchange, currency, and others) you are trading, these two conditions will always help you.

If you want to earn some extra money and want to become a professional trader, try to satisfy the needs by conjunction with those two conditions with a factor of confluence.

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#3 Search for the bullish development

line chart trading strategy

If you are wondering how the confluence factors will help you to earn some extra bucks, then here it is. You know, the more accurate and precise you can be on trading, you’ll have the upper hand. It always provides precise signals.

Now it’s time for you to understand the bullish divergence method. The steps mentioned above will help you because the reversal method is applied. The candle you’ve spotted already has a lower price. So the right side of it will indicate the positive price action. So, the RSI indicator and the price action both will move forward rapidly but in opposite directions.

There is another way to identify the potential reversal signal. Check the direction of the momentum Indicator. It simply shows you the resultant effect. So price and momentum must have the opposite movement to get the best possible results.

#4 Find the closest candlesticks of next 50 candle

Line chart example

As you have marked the previous 50 candles, it will be easy for you to spot the next one. Draw a horizontal line straight to the previous 50 candle points. The in-between area will show you the price decreasing part.

At the point of the closing line, you can see the value of the price is increasing. It’s time for you to give a call option. The call option must be regarded as Buying. As you have spotted everything, now invest how much you want to do. These steps will take hardly 60 seconds to do. That’s why it is often known as the 60 seconds call option.

#5 Time to gain profit

As all our steps to gain profit, if we fail at this moment, everything will go in vain. So, let’s see how to do that. When it comes to gaining profit, you have to wait until the candle gets close to the candle which is your target. It will be better to explain everything with a suitable example to make every step clear.

If you want to invest $100 on any binary options trading, then you have to search for less than 50 candlesticks near what happened before. Along with it, search for the 20 candles too. Draw the horizontal line from that 50 candlesticks.

When your next 50 candlesticks are touching the horizontal line, be aware and start investing that $100. Keep track of the candlesticks ( line chart). Fix your target of profit. If it touches your targeted point, it’s time to withdraw the money. At that point, the profit percentage is 65%. Then you’ll get an additional $65 with the investment of $100.

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Conclusion – Use line charts to trade binary options

Line charts are popular because of these simple reasons out there. Bar charts are also helpful but you don’t get this many opportunities. If you are a professional binary trader and want to invest in specific trading, always follow the line chart.

Frequently asked questions about line chart strategy:

What is the basic concept of Binary Options Trading?

In Binary Options Trading, you predict whether an asset’s price will rise (Call) or fall (Put), with profits or losses determined accordingly.

How is the RSI indicator used in Binary Options Trading?

The RSI indicator helps identify overbought conditions (above 80 RSI) and oversold conditions (below 20 RSI), guiding trading decisions.

What is a key strategy in Binary Options Trading using RSI?

A key strategy involves identifying candlesticks below 50 RSI, assessing overbought/oversold ratios, and using this information to make trading decisions.

How do traders profit in Binary Options Trading using this method?

Traders invest when 50 candlesticks reach a previously identified low point, with profits taken when the investment reaches a predetermined profit percentage.

About the author

Percival Knight
Percival Knight is an experienced Binary Options trader for more than ten years. Mainly, he trades 60-second trades at a very high hit rate. My favorite strategies is by using candlesticks and fake-breakouts

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