Wedges are, like contracting triangles, extremely common on the trading arena and they are an important pattern to use when doing the technical analysis. They are to be found either at the end of a trend, in the form of a fifth wave for the ones that are familiar with the Elliott Waves Theory (if not please check the Elliott Waves Educational series available for free) and in this case they take the shape of an ending diagonal. This is important because it means the structure for the inner waves is made out of three smaller waves of a lower degree and this can be used when trading binary options and looking for retracement levels.

Another important characteristic of wedges is to look for the moment a wedge breaks. Normally there is a retracement level associated with this moment, in the form of a measured move, but this is not mandatory, it is not a rule. It can be used though with the time associated to it, and this is important for binary options because we can make the connection between that time and the time a binary option expires. That means we can buy a one touch binary option for example based on the time characteristics a broken wedge is having.

More details about this in the recordings that come with this chapter.

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