In this article, I plan to explore MACD, the moving average convergence-divergence indicator, which goes hand in hand with my favorite “binary options golden strategy”. All professional Forex and binary options traders agree that a single indicator alone is not a sufficient way to create consistent winning trades.
The use of indicators, including MACD, should be combined with strategy, and ideally with fundamental analysis.
I know many of you are familiar with the MACD, and I want to break it down today and provide you with an idea of how this powerful technical analysis can help you with predicting an accelerating bullish trend, as the MACD is defined as a “short-term Next Trend, momentum indicator”! It shows us the relationship between two moving averages, and let me explain.
The MACD has 3 components:
1) MACD line = difference between the two moving averages set by default on day 12 – day 26 EMA)
2) signal line = day 9 EMA. Important: This is our Buy/Sell signal or with reference to binary options, our Call!
3) Histogram = represents the difference between these two lines. Like, for example, when two lines intersect – the histogram is at zero.
How can a bullish signal be recognized?
1) When the MACD line crosses the signal line, it signals us to buy a Call option. In fact, the formula behind this indicator calculates an increasing upward momentum, and it is presented to us visually by the line of intersection of the MACD with the signal line.
2) Another way to use the MACD binary indicator is through the centerline method, or axial method, where you basically observe the histograms, and when the histogram reaches zero, you know that the MACD line crosses the signal line, suggesting an acceleration of the bullish trend, signaling us the opportunity to enter the trade as soon as these two lines cross and the histogram is at zero, as the MACD is about to rise above the signal line.
The indicator is usually offered on all free sites, including the binary options brokers on our list, and you can set it to a 5-minute candlestick chart or 1 hour, depending on your trading preferences. MACD is the perfect indicator for short-term trading and works together with my favorite Binary Options gold strategy, which brings me a lot of success!
Conclusion:
The MACD binary options indicator can give signals independently, as well as in conjunction with other indicators. Many strategies for binary options use this indicator for different purposes.
Tagged with: Binary Options Indicator • MACD
