Previously in the article "Effects of Market Volatility on Binary Options Trading" we discussed the effects of volatility on prices and on your analysis of the markets.
  In this article we are going to discuss how to use Bollinger Bands and Moving Averages to analyze market volatility.
Using the Charts One of the better Technical Analysis methods to use during a volatile market is Bollinger Bands.
  They help analyze the dramatic swings in prices of an Asset.
  Bollinger Bands use mathematical algorithms to calculate the location of the high and low above and below a moving average.
These bands are based on standard deviation, which changes as volatility increases and decreases.
The bands will widen when volatility increases and narrow when volatility decreases.
When the Asset price moves closer to the upper Bollinger Band the opportunity to start a trade becomes more favorable.
  Likewise, when the Asset price moves away from the upper band it is time to end the trade.
Watching for the Trading Signal When we apply the volatile action of the market plus Bollinger Bands to Binary Options trading we see that as the Current Price moves closer to the upper band it is time to place a CALL options trade.
  When the Current Price starts to move away from the upper band it is time to place a PUT options trade.
When we analyze the Bollinger Bands over several days it is easy to see the Signal Point at which the trade is suggested.
  However, when applying the Bollinger Bands to hourly charts the Signal Point can be a bit elusive.
  It takes time and practice in reading the hourly charts in order to be confident that you are observing the right Signal Point.
  It is best to paper trade over a period of several days in order to gain the confidence need in understanding what the charts are signaling.
Don't rush and talk yourself into a false level of confidence.
  The more paper trading that you do will result in more In-the-Money trades later.
   Use the training facilities and research tools that your broker offers.
  It will be well worth it in the long run.
Support and Resistance On the financial news broadcasts and in analysis reports you will often hear the terms Support and Resistance.
  These items can best be seen on a chart that includes a Moving Average line.
  As the Current Price shows an upward trend you will occasionally see a short drop or dip with a short flattening of the price line then the price continues to rise.
  This brief flattening or Sideways Moving price is called a Support Point since the price continues to rise from the end of this brief time.
  This means that there are enough investors willing to buy the Asset and are "supporting" the popularity of the Asset.
When the price trend starts to move downward and briefly turns upward then continues to drop the high point of that brief uptrend is call the 'resistance" point.
  This shows that investors are "resisting" the downward trend by buying the Asset in hopes of the price trend turning around to an upward trend.
Even though Bollinger Bands includes Moving Averages as part of its analysis a Moving Average chart should not be used by itself in your decision making process.
The Binary Options Trading series started with the article "Binary Options, The New Investment Tool for the On-The-Go Investor" to present a foundation for people that desire to start trading Binary Options.
  While this series has presented a basic foundation for understanding Binary Options and the due diligence surrounding them, it is by no means complete in every detail.
  The casual investor should remember that there is no substitute for doing your own research and paper trading to acquire the skills needed to make any type of trade in the markets.