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Binary Options: Moving Average Convergence Divergence (MACD)

Moving Average Convergence Divergence (MACD) is a system of reading the trends in binary options. It reveals changes in the strength, direction, momentum, and duration of a trend in any stock’s price. A trend-following momentum indicator shows the relationship between two moving average prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the “signal line”, is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.

You can see the MACD on the bottom half of this chart:

preMACD

Crossovers are key elements of the chart – As shown in the first chart above, when the MACD falls below the signal line, it is a bearish A term used that indicates a market or a person believes an asset class will decline because of a la... More signal, which indicates that it may be time to sell. Conversely, when the MACD rises above the signal line, the indicator gives a bullish A term used that indicates a market or a person believes an asset class will rise because of a prepo... More signal, which suggests that the price of the asset Can be stocks, commodities, indexes or Forex currency pairs. More is likely to experience upward momentum. Many traders wait for a confirmed cross above the signal line before entering into a position to avoid getting “faked out” or entering into a position too early.


MACD