Chinkou Span Signals
The trading system, which we bring to your attention is a complex one, and its signals can often be found on different charts. We will work with only one of the tools this indicator has to offer us: the breakthrough of Chinkou Span line.
To perform Chinkou Span strategy you would need a binary broker offering technical indicators.
We continue to publish our series of advanced, but profitable strategies. Today’s one is based again on the fairly interesting and useful Ichimoku indicator.
How to use Chinkou Span for our trading strategy
So let's take a closer look. As the name implies, only one of the tools of the Ichimoku indicator is used - namely Chinkou Span. The line on the graph is shifted by a certain number of periods (for those who use Japanese candlesticks, a certain number of candles).
Let’s refer to the chart.
It shows that Chinkou Span is really late for a certain number of candles. We use the default settings, and Chinkou Span is shifted by 26 periods, that is, twenty six candles. As can be seen from the screenshot, Chinkou Span is often above or below the graph. This is also a pretty good signal, but we will consider it in the future.
We are interested in the moment when Chinkou Span and the price cross on the chart. This is the essence of the Chinkou Span breakthrough binary options strategy.
However, it should be noted that these intersections occur too often. Therefore, we cannot say that the signal will appear every hour. On the other hand, the signals that appear at the same time, are sufficiently strong and profitable.
Next we will see precisely how to work with this trading system.
How to get Call and Put signals with this strategy
As we have noted above, trading signals for this strategy appear when Chinkou Span crosses the price on the chart. We noted this place on a screenshot. In reality, Chinkou Span moves in sync with the price on the chart and, therefore, to determine the place where you can buy an option is easy.
But in our example, it is necessary to count twenty six candles (our period of 26, we talked about it in the beginning) of Chinkou Span line forward. There is a signal to buy a Call option, as the price line crosses below the top.
The first image shown indicates the possibility of a Call option buying. But if Chinkou Span crosses the price of a top-down, it will be the opposite signal.
In this case, the probability of trend reversal down is considerably increased, so there is a signal to buy Put options.
The only thing that we can recommend to traders is to be attentive to the settings of the indicator, because everyone is able to optimize it to his own needs and the Chinkou Span is not necessarily to be set to exactly 26.