Ichimoku Cloud can be attributed to the most popular and reliable binary options strategies. Traders are required to install the Ichimoku Kinko Hyo indicator chart (or Ichimoku Cloud) and closely monitor the situation.
To perform Ichimoku strategy you need to be an experienced trader and to possess a trading account at a regulated broker.
It isn’t an easy strategy to perform but could be very helpful in your daily trades as it provides clear signals for Call and Put options buying.
How to use Ichimoku indicator in your strategy
As you probably know, Ichimoku indicator is a set of curves, each of which is a moving average and it is shifted in a certain period of time. Currently, there are several strategies using this indicator. As part of our strategy, we are only interested in Senkou Span A and Senkou Span B.
These two lines form the so-called Ichimoku Cloud, being both its upper and lower bound. It should be noted that these lines are determined as support and resistance levels. Therefore, traders do not need to put any additional markup on the chart.
Thus, the essence of binary options Ichimoku Cloud strategy is as follows. Traders need to wait for the price on the chart and closely monitor its behavior. After it goes into the cloud, that is caught between Senkou Span A and Senkou Span B, it breaks one of the faces and comes out.
Everything seems a bit complicated at first but after 2-3 weeks of daily trading you will probably start to see some profits.
Buying a Call option
Let’s consider an example that shows the possibility of buying a Call binary option.
The following figure shows how the candle breaks above the upper boundary of the cloud. After that, the second candle is even higher. Call option buying is recommended immediately after the price breaks through the cloud, and the candle is fixed over it.
There is also another trading signal that would indicate the possibility of buying a Call binary option. This can be done in the case where the price, after going down is unable to break the upper limit of the cloud. In this case, it bounces off it and goes upwards.
Buying a Put option
The same can be said about Put options buying as the essence of trading on the slide is exactly the same. Traders must wait for a situation when the price will go inside the Ichimoku Cloud and locate between the two lines of the Senkou Span A and Senkou Span B.
On the graph you can see how the price hits the lower limit of the Ichimoku Cloud in two places, creating a signal to buy a Put option.
In order to make the signal confirmed, it is advisable to wait until the current candle, which has broken through the clouds, closes below it. As in the case with an upward movement, in downward trend may appear situations when an interim correction is performed.
The price comes to the upper boundary of the Ichimoku Cloud, but does not break it.
In this case, you can buy a Put binary option.
Many traders make one common mistake in cases when the price goes inside the cloud and begins to move within the boundaries that form it. Then they begin to trade within the cloud, which is totally not recommended. In order to avoid mistakes trading the Ichimoku cloud, it is desirable to wait for the breakdown and consolidation, and only then begin trading.