Best binary option trading indicator strategy Moving average conversion diversion
MACD- Moving average conversion diversion is very popular strategy. it works based on price action and traders predict market movements by its two moving averages. The moving averages used in this indicator are basically Exponential moving averages. The traders can change the indicator value as per their understandings but most of traders use it as default value. Its default values are 12 and 26 time period for EMAs and 9 for signal line known as MACD line.
How to read MACD Indicator ?
The function of MACD indicator works in two ways. when the market is upending or down trending and when the market is overbought or oversold. We take indication from this strategy when its moving averages give crossover to its histogram. When its moving averages cuts each other in upward direction there are most chances the market will go up. When the moving averages is down coruscation and below histogram then chances of downtrend is most.
Understand Uptrend and downtrends for MACD
To understand the trend of MACD indicator we need to focus on its histogram. when the bars and graphs stars creating above the histogram line we can say that the market about to change its direction. means when the signal line and histogram both are under below the histogram it means the trend is downtrend like this when the signal lines and histogram formation is above the line that means the trend is upward trend.
What are the Drawbacks of using MACD ?
For using any indicators there are some advantages and disadvantages too. To use is most appropriate way we need to know both things about it.
When the price crosses the zero line well the price is above but when we get signals by crossing it for downward direction its already changed the direction. this is its drawback.
When the MACD reaches the overbought label the price keep moving in upward direction but when it cross the zero label the signal is already passed . after that the trend may change reversal.