Double combinations fall in the category of complex corrective waves and they are one of the most difficult corrective formations to be interpreted. Of course, there is still the triple combination as well, but that would be the purpose of another analysis most likely.
Like the name there suggests, the combination is actually “combining” two different corrective waves and we have only three possibilities for these waves: flat, zigzag or a triangle (expanding or contracting).
The link, or the intervening wave as it is also called, should be still a correction, usually a simple corrective wave, and should be labeled with the X letter. Therefore, the name of the X wave appeared.
In other words, a double combination is formed out of two corrective waves that are linked together by an X wave, an intervening wave, with the sole purpose of connecting the two corrective waves named earlier.
It is mandatory to note that the X wave should not retrace more than 61.8% when compared with the whole previous correction and this calls for correctly identifying the end of the previous correction (or abc) as the 61.8% should not come.
Usually that retracement should be up to 50% in strong trends.
The double combination is formed out of a flat, and x wave and a triangle, or a zigzag, an x wave and a triangle, or even a zigzag, an x wave, and a flat.
The structure is 3-3-5-x-3-3-3-3-3 in the first case, 5-3-5 – x – 3-3-3-3-3 in the second case and 5-3-5 – x – 3-3-5 in the last one.
Double combinations appear as being part of a contracting triangle, either as the entire leg of a triangle or just a part of a leg of a contracting triangle.
It should be mentioned the fact that most of the times, meaning more than 80% of the cases the double combination ends with a contracting triangle, so understanding how a contracting triangle functions and what are the rules there is coming of a great help in knowing how to treat a double combination.
For more information about how it looks and tips regarding how to trade binary options when using double combinations, make sure you are watching the recordings that are coming with this educational series.