Topic: MACD Strategy
I know that many of you are not familiar with MACD and I want to break it down today and provide you an insight for how this powerful technical analysis can assist you with predicting an accelerating Bullish Trend, since MACD in definition is a ‘short-term trend following, momentum indicator! It shows us the connection between two moving averages and let me explain.
MACD has 3 components
1) MACD line = the difference between two moving averages, set by default on 12 day – 26 day EMA)
2) A signal line = 9 day EMA. Important: This is our Buy/Sell Trigger or in reference to binary options, our CALL Signal!
3) The Histograph = represents the difference between those two lines. so for example when the two lines meet the histogram is at zero.
How do we recognize a bullish signal?
1) When the MACD line crosses over the signal line, it signals us to buy (call trade). In essence, the forumula that’s behind this indicator calculates the increasing upward momentum, and it’s presented to us visually with the MACD line crossing over the signal line..
2) another way to use MACD is with the centerline method where you’re basically observing the histogram and when it reaches ZERO you know that the MACD line is crossing over the Signal Line suggesting an accelerating bullish trend, signaling us of an opportunity to enter call trade once the two lines intersect and the histogram at zero, as the MACD is about to climb above the signal line.