Among the variety of graphical patterns formed by asset charts that provide binary market traders with information about the price trends, the most favorable are the patterns that determine both the continuation of trend movements and the price reversals and construction of new trends. Today we will consider a classic example of such a universal graphic pattern — the Wedge.
As a forecasting tool, Wedge has a rather diverse format of construction, so in order to identify all its types as precisely as possible, we will examine all modes of this patterning in detail.
The Wedge has two main types — descending and ascending, and to generate forecasts it is necessary to take into account the trend direction in the formation of the pattern. So, the ascending wedge on the growing trend has the form of a triangle with an angle directed upwards:
This pattern occurs when the market can no longer drive the asset price up for certain reasons. An ascending wedge on a growing trend is a reversal trend model.
A downward wedge on the growing trend, on the contrary, indicates the continuation of the trend movement. In this case, the angle of the pattern will be directed downwards:
The formation of the Wedge pattern on a downward trend has a similar format, the only difference is that the reversal of the trend is indicated by a downward wedge:
An ascending pattern is a signal of the continuation of the trend movement:
There is one simple rule for issuing contracts following this trading system — UP options are only opened when the pattern has a descending format, options DOWN are open only with an ascending wedge.
To work comfortably with this strategy and correctly determine the Wedge pattern, traders need a secure terminal with available graphical tools for technical analysis. Such a set of conditions and services is available on the high-tech terminal of the Binomo broker.
To issue UP options use two technical situations. The first is a downward wedge formed on a growing trend. The contract itself is issued at the end of the price correction — a breakdown of the resistance level of the pattern.
The second situation is the formation of a downward wedge on a bearish trend, which indicates an early reversal of the trend. The contract is opened at the breaking of the resistance level.
There are also two technical situations for issuing DOWN options. First, a downward wedge is formed on a downward trend after the breaking of the support level, which indicates the end of the correction.
The second technical situation is an upward wedge (a reversal trend model) formed on a bullish trend. After the breaking of the pattern support level, conclude a deal DOWN.
In order to determine the expiration of trading positions as accurately as possible, it is necessary to take into account several indicators at once: the current market volatility and the periodicity of the chart's timeframe. Contracts with the expiration of 5 minutes with a 1 minute timeframe of the chart are optimal for intraday trading.
Graphic patterns, including Wedge, have the highest profitability of signals. On average, more than 80% of the trading forecasts formed by the strategy give a positive result. Thus, with this format of analysis, we receive a high growth rate of operating capital.
Trading operations with this strategy have a fairly high dynamics, therefore, to create the most effective conditions for management, we recommend that contracts be executed with a volume not exceeding 3% of the amount of capital. You can use the signals for several trading instruments at a time, and draw up contract packages, thereby increasing the overall financial performance of the strategy.
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