Zooming In the Price Action: The Haramis

Zooming In the Price Action: The Haramis

Submitted by adil on Fri, 04/04/2014 - 09:15

Compared to other traders of financial instruments such as stock traders, mutual fund traders or vanilla options traders, a binary options trader must have clearer and better picture of price movements. It is imperative that binary options trader carefully watches, analyzes and strategizes all patterns and movements that he or she witnesses. After all binary options are mostly about trading prices in small duration and quick successions. The binary options trader must be able to trade price in very short durations and for that awareness beforehand is a must.

Prior articles have focused on rather broader and longer period versions of trend patterns that a binary options trader can use to make good trades. However, every candle stick on the chart matters to the binary trader. In the absence of a wide spectrum trend or signals given off by other indicators or tools, the trader should not stay put and wait for the market to enter in a trending phase. Sometimes the markets go in to such a mode for considerably longer period of few days. Binary options trader will risk minimizing their returns if they skulk around for their favorite conditions to appear.

Bullish and bearish harami are two candlestick patterns. These patterns allow a binary options trader to watch for good entry nodes. A bullish harami is a candle stick pattern that signals a highly likely reversal in the downtrend. On the other hand a bearish haramis is candle stick pattern that shows a highly likely reversal in an uptrend. Whenever these two indicators show that there is a possible reversal coming ahead, it is time for the trader to make an entry.

Both haramis are made up of two candle sticks. A bullish harami consists of a large candlestick followed by smaller candlestick. The smaller candlestick’s body stays within the vertical range of the larger body. The larger candlestick represents the end of bearish trend, and the smaller candlestick shows a start of new trend.

The smaller the second candlestick is the greater is the chance of reversal. Therefore, if the second candlestick is a doji, the chances become highest.

A bearish harami also consists of two candlesticks, one large and other a small one. Here again the second candlestick has a body that stays within the vertical range of the larger candlestick. The preceding candlestick represents end of an uptrend, and the smaller candlestick shows reversal of the uptrend in to a downtrend.

Again, the smaller the second candlestick is the greater is the chance of reversal. If the second candlestick is a doji, the chances for reversal increase.

Therefore, if the price is stuck in a range, waving along in smaller indefinite trends, a binary option trader can look at the candlesticks from harami’s prism and enter sure trades. If the reversal is bearish, enter put binary option trade. If the reversal is bullish, enter call binary option trade. Equipped with this approach, a binary option trader gains the ability to minutely observe price action and turn stalemates in to opportunities.