Binary Options Strategy – Fibonacci Support and Resistance levels

I guess we all vaguely remember the term “Fibonacci numbers” from school or university classes, but I doubt that any of you remembers what is behind this term =) And you better refresh your memory as a great binary options strategy is based on Fibonacci numbers.

When you trade binary options you can use a Fibonacci Retracement Indicator from the Live Graph and with its help built support and resistance levels that will indicate when to buy call or put option.

How Fibonacci Strategy Works in Binary Options

Step 1.

Open Live Graph and find an asset that has a recently reversed trend. The new trend should not be more than 50% of the previous one. Just like on an example below. Once you found such asset, draw a trend line for the previous trend with an instrument marked with red on the picture.

Fibonacci-strategy

Step 2.

Add Fibonacci Retracement indicator to the graph (it is located in the left menu and looks like 3 parallel lines).

Important: It is super important to add this instrument correctly to the graph. You need to find the beginning of the trend that you found and marked before and from it, we drag the Fibonacci levels straight to the end of the trend.

In our case, we had a downtrend, so we drew Fibonacci levels from top to the bottom. If you have an up-trend, you should draw the Fibonacci levels from bottom to the top.

how to build fibonacci levels

Step 3.

Let’s look for a perfect moment to buy call or put binary option. Those colourful lines that you see after you have Fibonacci levels on the graph are the support and resistance levels.

Remember: The strongest support and resistance levels are: 38,2% (0,382), then 50% (0,5) and 61,8% (0,618). If the price has bounced from one of these levels, then it will continue to go in a direction to which it bounced; if the price has gone through the level, the trend will continue.

Call or Put?

Let’s look at the picture above once again. As you can see at a certain moment (2 candles before I made this screenshot) the price has gone through the 50% level (0,5) For us it is a signal to buy PUT option right after the candle that crossed the level would close.

How to choose expiration time?

In this case we are trading on 1 minute graph. Considering that a strong resistance level was crossed, I would expect rather strong continuation trend for about 3-5 candles. And even if the price bounces from 0.382 it would take time till it comes back to the level we are at now. So in this case you can buy a 2-5 minutes binary option.

Fibonacci strategy results

If we look at what happened to the graph later, we can see that the price has continued its downtrend for a long time afterwards, meaning we got our option in-the-money.

fibonacci strategy result

This is not a 100% strategy, as any strategy for binary options it sometimes gives false signals. However, so far it is one of the most reliable strategies that I have worked with. Out of 10 trades 7-8 are always in-the-money. Not bad, ha? Try it yourself and see that it’s quite simple and easy-to-use.

The most convenient brokers for this time of short-term option trading will be 24options (they have wide choice of expiry times – 1, 2, 5, 10, 15 min etc) and broker OptionFair which as well has a variety of expiry times in short term trading.

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