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Buy Support and Sell Resistance the Binary Way

FairValue Trader

The 30-minute bar chart below shows April crude oil futures going back about a week to last Thursday afternoon.  This future experienced some support just above the $52.50 area late last week, shown in the lower shaded area.  As crude oil rebounded, it used the $53.00 area as a pivot and then broke below that price yesterday, failing to trade back above it with a high of $52.91 overnight.

Today we will look at an interesting way to trade this market using binary options.  In traditional futures markets, traders typically have to choose to be long, short or flat.  However, binary options present several additional ways to position yourself for any kind of market view.

We will look at an example of daily crude oil options expiring at the 2:30 pm EST close; however, options are available with several different expiration time-frames including an hourly basis and weekly basis, as well as options on a variety of other markets. These CFTC-regulated binaries have a base settlement value of $100.  The trade risk is limited, and the risk and potential reward are always predefined before a trade is entered.

Read the conclusion of this article at BINARYOPTIONS.NADEX