Pinocchio pattern trading
In contrast to other binary options strategies Pinocchio can be easily used without any specific professional skills and knowledge of fundamental analysis. It is appropriate for commodity futures and stocks as well as for Forex currency pairs trading.
To trade Pinocchio patterns we recommend you opening an account at a regulated binary broker which offers demo trading.
Pinocchio strategy for binary options can be used with different types of charts. Those who are more comfortable with the bars should look for a model consisting of three bars. Those who prefer Japanese candles will be looking for a model that consists of a three candles.
How to identify Pinocchio pattern?
The end of the bar, which is located on the left should occur at the opening of the middle of the bar, so the middle bar shall be closed at the opening of the right bar. In addition, the one in the middle must have a sufficiently long shadow, which greatly extends beyond the right and left bars.
In order to understand how to use the strategy, it is necessary to understand Pinocchio pattern, which is located in the middle, and how it should look like. Primarily it should be noted that the Pinocchio pattern has a distinctive long shadow.
Sometimes in trading literature, this shadow can be called a spike. The spike or shade must be long enough and at the same time directed in the opposite direction from the current motion. It is important to note that the longer the spike is, the more likely the strategy will work out.
On the left side of the pattern should be located the left eye of Pinocchio. The nose and the eyes should be combined in a special way. An ideal pattern can be recognized if the spike goes far beyond the previous bar or candle and the body does not go beyond it.
In some cases, the Hammer’s body (candlestick model) or Pinocchio pattern can be expanded beyond the previous one. But in order for the signal to be as clear as possible, it is better to wait for the ideal Pinocchio pattern. There is another important point.
The spike of the hammer must exceed the length of its body several times.
How to trade Pinocchio pattern?
Finally, after we’ve already discussed how this pattern looks like, you can go directly to the recommendations on the trading positions opening. Binary option purchase is carried out when there is evidence of the last candle from the combination.
When it comes to a situation with a rising trend, the body of the third bar needs to move beyond the body of the second. Only then we can say that the pattern is confirmed.
In this situation, you can buy a Call binary option.
If the trend is moving downwards, the bear bar on the right of the Pinocchio pattern should cross the body of the candle from the top down.
This will indicate that a bearish market trend will follow and you can buy a Put option.
Once you identify the Pinocchio pattern then it will be easy for you to take a decision for Call or Put option.