Kijun and Tenkan lines
Ichimoku indicator is a versatile tool that allows traders to obtain comprehensive information on the state of the market and build their forecasts based on this information. Because of this reason, we decided to publish a Golden Cross binary options strategy.
To perform well on this strategy you will need to open account at a binary broker and use the MT4 indicators.
Well known Ichimoku indicator is in the center of this strategy. We are interested in only two of the components of the indicator – Kijun and Tenkan lines. On the other hand, in order to obtain stronger signals we can also additionally use Ichimoku cloud.
How to use Ichimoku indicator for Golden Cross strategy
The effectiveness of the indicator comes from the fact that these curves and the cloud are already installed in the indicator and you do not need to configure any additional algorithms. Golden Cross binary option strategy includes only one indicator.
Let's turn to the chart.
We can see the Ichimoku indicator on it with default settings. Kijun and Tenkan curves painted in blue and red colors. As the shown on the graph, they sometimes diverge and then converge again. We can state this part of the display is somewhat similar to the well-known moving averages indicator. The principle of operation of this strategy is built around the same aspects.
Naturally, the main idea of this strategy, as well as many others is to deliver clear trading signals for Call and Put options. Therefore it is necessary to closely monitor the behavior of the curves Tenkan and Kijun. A trading signal appears at a time when these curves intersect at a price chart.
What are the conditions for Call and Put signals
Golden Cross binary options strategy is configured to work with a Call and Put option. When Ichimoku indicator creates a corresponding signal, you need to buy this kind of contracts. But in order the signal to been stronger, it must comply with several conditions.
The main signal of the Golden Cross strategy is Tenkan and Kijun crossing.
When Kijun crosses Tenkan from down up it is a good signal for Call options buying.
In the opposite side when Kijun crosses Tenkan from up down we recommend to buy Put options.
Ichimoku cloud role in this strategy
We haven’t informed you without any purpose in the beginning of this article about the fact that it is desirable to pay attention also to the Ichimoku cloud and how it is positioned in relation to the current price on the chart.
On the first image, we have two examples of how this strategy works. The first one is also a pretty good trading signal. However, it appears below the Ichimoku cloud at a time when the price is well under the clouds. The problem is that often the price has to start rebounding from Ichimoku cloud.
Therefore, the signal can’t be called strong, as unlike the Golden Cross, the Ichimoku cloud can block the way for price growth, although in this example, all has ended happily. The second signal is stronger, because at the moment the Golden Cross appears, the price is above the Ichimoku cloud, thus confirming the strength of the signal.
Golden Cross binary options strategy is a strong enough and at the same time, an effective trading tool. This is a recommended to use strategy for financial markets. One of its main advantages is the clarity of signals and their non-triviality. Thus traders can benefit from buying the option immediately when they see a signal.