Binary options strategy “Wedge” is based on the formation of the same name figure of graphical analysis on the graph, which looks something like a triangle. The main difference of considered patterns is that the wedge has a more elongated shape and its apex has a slope upward or downward. This figure of graphical analysis occurs on different time scales.
It is important to remember that the longer the time interval at which the wedge is formed, the more value it should bring. Graphic figure is formed when the rate of growth or decline in prices on the market is slowing down. I.e. maxima still continue to be updated as well as minima. But the price is not able to grow or decline strongly. That is the power of traders or buyers (depending on what kind of shape is formed) is waning.
When bearish wedge appears traders receive dominance on the market, and when the bullish wedge takes place, respectively, the buyers do. During the formation of the downward graphic figure on the market one should carefully monitor if the price breaks the lower boundary of the figure, which is also the support line. After the broken support line, we can say that the market begins a downward movement. At this point, the trader can buy a binary option Put. However, it is desirable to wait for the price not only to break the lower bound of the graphic figure Wedge, but also to consolidate under it. This would indicate that the figure was finally formed and its working out began.
The same can be said about the formation of the graphical analysis figure of an upward or “bullish” Wedge. At its formation it should be closely monitored for the time price exceeds the upper bound, that is, at the same time, the resistance line. In this case, we can say that the bulls, i.e. buyers, begin to occupy the dominant position on the market. The market starts an upward movement. At this point, the trader can buy a binary option Call.
Nevertheless, in order to be completely sure that the market starts upward movement and a Call option can be purchased, the trader should wait until the time the candle is closed over the resistance line.
That’s all for now. Got any questions? Just ask the expert!