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§5.6 MACD indicator

This indicator can be considered as one of the most popular. Its main function is to detect what kind of trend there is in the market now – bullish (uptrend) or bearish (downtrend). As traders say, trend is your friend. You should always follow the trend rather than go against it. So, if an uptrend prevails in the market then it is better to make trades in an upward direction.

Histogram is the most convenient way to graphically represent the MACD indicator. It looks like a horizontal straight line on both sides of which, there are little lines drawn by a computer program. If the little lines are drawn on the top of the horizontal line then a trend is positive; if below then it is negative. It is notable that length of the little line also depends on the strength of a trend. The best time to make trades in Binary Options is when the trend’s direction changes. It means that trend has changed and there is some potential left to move in the new direction. If you buy at this moment then you have a very good chance to win.

The basic principle of trend analysis by means of the MACD

The basic principle of trend analysis by means of the MACD indicator is just the same as with moving averages. However, this indicator is more illustrative and simple to understand which is what makes it so convenient.

As a rule, a MACD indicator is plotted on a separate window below the chart so that you can see the indicator and fluctuations of a price itself.

§5.7 Stochastic indicator→