Binary Options Wedges

Binary Options Wedges

Binary Options Wedges

When you’re conducting technical analysis, binary options wedges can be of utmost importance, especially if you’re trading in short or intermediate time spans. They are also connected to trend reversals and consist of two converging trend lines which then form an arrow of sorts. In this article, we will dig a bit deeper when it comes to this trading term, but be advised that some experience may be needed to grasp how things work. In any case, we will go through everything you need to know if you want to use this principle successfully, so stick around and see what our experts have to say about this subject.

Binary Options Wedges | What are they?

Like we already said, binary option wedges are essentially reversal patterns and five-wave structures. They can belong to two main categories, depending which way the trend lines are pointing: falling wedges and rising wedges. What is important to say is that you expect the price to go in the direction opposite to the wedge. In other words, if you come across a rising wedge, you will want to start buying put options, whereas if you come across a falling wedge call options are recommended. The 2-4 trend line shows you when to do this because it acts as a support/resistance level of the wedge. Once this Trend Line is broken, you can start buying the aforementioned option, depending on the type of the wedge, naturally. But we’re not done yet – there is more to discuss about binary options wedges.

Binary Options Wedges | Time element

How do you choose the Expiration Time once you identify your binary option wedges and see that the 2-4 trend line has been broken? Well, the price will retrace and reach the 50% in less time than it took the whole wedge to form. Otherwise, you’re not dealing with a wedge. Therefore, take a look at how long the wedge lasts, translate that time period to the right side of your chart and you will have a pretty good idea of what to do with your expiry time. Keep in mind that the 50% line will be attracting the price constantly, so once that point is reached, you can expect the situation to remain more or less the same for a while.

Binary Options Wedges | Conclusion

So there you have it, binary options wedges in a nutshell. The concept is really not very difficult if you already have some experience in trading and have mastered the basic terms like waves and trend lines. It’s very useful that the main idea is very clear, so you know exactly when to react, i.e. start buying a certain type of options. But if you think you still have a lot to learn before you can tackle binary options wedges, you don’t need to look very far – our website has everything you need to become a superb trader.

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Author: Ben Prescott
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