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V-Bounce Volume Spike Trading Strategy

To maximize profits in smaller trades, many traders focus on more liquid markets to increase trade frequency. One popular 60-second options strategy involves identifying clear price rebounds from defined support or resistance levels. This approach allows traders to capitalize on rapid, predictable price movements in a short time frame.

Role of support and resistance

Support and resistance (S&R) levels are essential tools for trading on Qption. These levels help traders identify potential entry and exit points by marking price zones where assets have historically reversed or paused. Recognizing these zones enables traders to make more informed decisions, anticipating price rebounds or breakouts to optimize their trading strategies. When a price approaches pre-determined support or resistance levels, traders can identify the area as a potential &qout;bounce or break spot.&qout; This designation helps traders anticipate whether the price is likely to rebound (bounce) off the level or break through it, signaling a potential continuation in the direction of the breakout.

Qption traders have multiple methods to identify support and resistance zones, including trend lines, moving averages, and candlestick patterns. Testing the reliability of these S&R levels is crucial, as it helps traders gauge their effectiveness in predicting price reversals or breakouts. This validation process ensures that traders are basing their decisions on robust, actionable zones rather than temporary price fluctuations.

Many elements can act as support and resistance levels, providing traders with potential points of price reversal or breakout. Here are a few examples:

Historical Highs and Lows: Previous peaks and troughs often serve as strong support or resistance zones.
Moving Averages: Commonly used averages like the 50-day or 200-day moving averages can act as dynamic support or resistance.
Trend Lines: Lines drawn along price trends help identify levels where the price may continue or reverse.
Fibonacci Retracement Levels: Popular levels like 38.2%, 50%, and 61.8% are frequently used to predict support and resistance zones.
Historical Highs and Lows: Previous peaks and troughs often serve as strong support or resistance zones.
Round Numbers: Psychological price points, such as 1.00 or 100.00, can naturally act as barriers for support or resistance.

Break or bounce spotOnce an Qption trader identifies a key support or resistance level, they establish a “line in the sand.” This level becomes a critical marker, serving as a reference point for potential trade decisions. By marking this spot, traders gain clarity on when to act, as they watch closely for price behavior around this crucial level—whether it bounces or breaks.

Why is this important?

An Qption trader benefits from marking specific levels, zones, and price areas in advance, as these act as predefined decision points. By identifying these key spots early, the trader can focus only on significant price movements, filtering out irrelevant fluctuations. This approach helps ensure that when the price reaches these marked zones, a clear decision point is triggered, allowing for more focused and disciplined trading.
Without a filtering system, an Qption trader risks being overwhelmed, as every new data point would carry equal weight, potentially leading to emotional decision-making driven by fear and greed. By establishing filters—such as key levels, zones, or indicators—the trader can prioritize relevant information and reduce noise. This disciplined approach minimizes emotional reactions and helps maintain a clear, focused strategy, enhancing trading effectiveness and consistency.

After identifying a break or bounce spot using their chosen tools, the trader can patiently wait for the price to approach that specific zone. Once the price reaches the designated support or resistance level, the trader observes whether it breaks through or bounces off the level. This approach enables the trader to make calculated decisions based on clear price actions, increasing the likelihood of executing trades aligned with their strategy.

A break occurs when the price pushes through a support or resistance level, an event known as a breakout trade. This breakout indicates that the price has gained enough momentum to surpass the established zone, often signaling a continuation in the direction of the breakout. Traders look for breakout trades as potential opportunities to enter positions in the direction of the trend, anticipating that the price will sustain its movement beyond the former barrier.
A bounce occurs when the price fails to push through a support or resistance level, indicating insufficient momentum to break the zone. In this scenario, the price “respects” the level and reverses direction instead. Traders often use this reaction as an opportunity to enter trades in the opposite direction, expecting the price to continue moving away from the support or resistance zone. This behavior suggests that the level remains a strong barrier, at least temporarily.

On the Qption platform, we focus on identifying breakout trade setups (strikes) and the first pullback after a breakout (boomerang) in the options market. This approach involves:

Breakout Trade Setup (Strike):Watching for a strong move where the price breaks through a defined support or resistance level, indicating a possible trend continuation. This breakout is considered a strike and is an opportunity to enter in the breakout direction.
First Pullback After Breakout (Boomerang):After the breakout, the price often pulls back briefly to test the broken level. This first pullback (boomerang) can provide a secondary entry point, confirming the breakout's strength as the price "bounces" off the previous level before resuming its trend.

This strategy allows for both momentum-based entries on the breakout and confirmation-based entries on the pullback, increasing the potential for well-timed trades aligned with the market's direction.Trading bouncesA bounce scenario could mean that the price is either making a small retracement, a big retracement, or a reversal. In the case of a small retracement, the price might still break through the support and resistance a little way later. Big tops and bottoms and Fibonacci levels are usually not broken without at least some "respect" for these levels (price won't go through the level without stopping).A bounce trade can be entered via various methods:

Direct:A trader attempts to trade directly at the expected support or resistance zone.Example:Let's say that you are looking at a particular Fibonacci level or top as a resistance. Having an entry order directly at that level is one way of trading an expected bounce at that S&R.Advantage: Earliest entry.Problem:Stop-loss placement as the price can overextend on smaller time frames through the S&R area — even if it's slight.
Confirmation of bounce:After the breakout, the price often pulls back briefly to test the broken level. This first pullback (boomerang) can provide a secondary entry point, confirming the breakout’s strength as the price “bounces” off the previous level before resuming its trend.
Breakout after bounce.:One of the differences is the usage of fractals (we'll explain more in the section below). Also, read about scaling in and scaling out on the Qption platform.

Bounce using fractalsAnother way to trade the bounce is by using fractals. Here's how the process works:

An Qption trader can anticipate a certain S&R to be important.
Wait for the price to stop or move to that level and make a fractal.
Wait for the price to move away from that S&R.
Wait for the price to form a fractal on the opposite side.
Wait for a break of that opposite fractal.

What does this mean?Essentially, by allowing a price stop, reverse, stop, and reverse, the trader now has two lines in the sand. One is at the expected S&R, the other is on the opposite side. A break above or below either of these 2 levels then constitutes the likely winner.

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