On the Binomo platform, you have many technical analysis tools available to help you in finding the best trade entry points. Support and resistance lines are some of such instruments. You can trade only with them when the price is ranging, but they are not sufficient when it comes to predicting the moment the price breaks out of them. You will have to apply an indicator alongside. And the Stochastic Oscillator creates a perfect pair with the support/resistance.
Today, I will present you a trading method that combines the Stochastic with the support and resistance levels.
Support and resistance in combination with the Stochastic Oscillator
The support and resistance levels are the lines between which the price fluctuates. For some time it seems that the price cannot go beyond them. Nevertheless, sooner or later, it will break the support/resistance and move further down or up.
Important information for the traders is to know when the price breaks out from the support or resistance levels and how low or how high it can go. In order to find out, it is a good idea to use the Stochastic Oscillator. You can also read more about this indicator in our guide How To Use Stochastic Oscillator For Trading Trend Reversals.
Adding the Stochastic indicator to the chart on the Binomo platform
To add the Stochastic to the chart, you must first log in to your Binomo account. Choose the asset and the type of chart. Then, click on the Chart preferences icon and find Stochastic under the Indicators tab.
By default, the overbought level for the Stochastic is set at 80, the oversold level at 20 and the period at 14. You do not have to change these settings to the needs of today’s strategy.
The Stochastic will appear in a separate window beneath the price bars. There are two horizontal lines which represent the overbought and oversold areas. And there are other two coloured lines where one is the Period K and the other Period D.
How to use the Stochastic along with the support and resistance levels on Binomo
The points of your interest are when the Period K and the Period D run below the oversold or above the overbought lines. You need to wait when they cross each other and move towards the 20 or 80 levels. Then, check how the price behaves regarding the support or resistance lines.
Opening a buy position with the Stochastic and support on the Binomo platform
Use the Japanese candlestick chart. If you set the period of the candles at 5 minutes, you should choose 30-minute or more for trade duration. When both lines of the Stochastic move in the oversold area, wait for the moment the D line intersects the K from below and together they move over the oversold zone. At the same time, the price bar should reach the support line. This is a good time to enter a long trade.
Opening a sell position with the Stochastic and resistance on the Binomo platform
When you plan to open a sell transaction, wait for the Stochastic lines to move above the overbought level. The D line should cross the K line from above and together they should fall below the value of 80. The candles should approach the resistance line at the same time. This is a signal to enter a short trade.
Using the Stochastic Oscillator together with the support and resistance is a good strategy for trading on Binomo. You should only follow the rules described in this article. This way you will get the best entry points for short and long transactions.
Try this method on the Binomo demo account first. Practice until you are confident that you are ready to move onto the real account to invest your own money.
Tell us about your experience with trading the Stochastic along with the support and resistance. There is the comments section that serves for this purpose.
Wish you high profits!