Any contracting triangle travels within five different waves that should be labeled a-b-c-d-e and these waves should be all corrective ones. Besides that, is there any other thing to consider when looking at these triangles?
The answer is yes and we are talking about the thrust of a contracting triangle. The name may seem fancy but this is actually being the measured move of any triangle and it has some specific rules to consider.
The first one refers to looking at the longest leg of the triangle, (which is usually wave a but it can also be the b wave in the case the triangle is an irregular one) and measuring it.
After that, take 75% out of that length and the outcome should represent the measured move.
However, where to be applied? Well, it should be applied to the end of the e wave, basically at the moment the contracting triangle is finished.
The second thing to consider is the nature of the triangle you are analyzing. If the triangle is a limiting one (in the sense that it appears as a continuation pattern – price should break in the same direction like the previous trend prior to the triangular formation) then it should form a fourth wave type or a b wave type and therefore the measured move points in most cases to the end of the whole structure.
On the other hand, if the triangle is a non-limiting one (acting as a reversal pattern – meaning price should break in the opposite direction than the one prior to the triangular formation) then the thrust of the triangle, or its measured move is only the minimum thing to consider as price actually should move more aggressive into that specific direction.
More details to be found out by watching our series of four recordings we are also uploading on the official Youtube channel for binaryoptions.education and keep in mind that these recordings are referring at trading binary options based on technical analysis setups. Find more clues by watching the recordings above.