This is the last video in our Binary Options 300 Series. This is by many Binary Options 305: Momentum and MACD Setup. This video, along with the rest of the videos in this series, and Binary Options 100 and Binary Options 200, have been brought to you by binaryoptions.education.
As mentioned, this is the last video in this Binary Options 300 Series. This video has been made to give you a further insight into the MACD, and how to use the MACD to identify momentum, especially short-term momentum in financial markets. The MACD is one of the most popular indicates used and technical analysis. So I feel it’s important that’s I give you a further insight into the MACD indicator.
Many traders and wannabe traders know that the MACD is used as a crossover system, or crossover indicator, that when the MACD crosses, price can move on the upside and the downside. But many traders do not fully understand this gauge to the right, here, which has a center, at zero, and then goes up and down from that zero mark.
Now what I want to demonstrate to you is this strength of bullish crossovers when above this zero mark, and the strength of bearish crossovers below this zero mark. As they crossovers are stronger when coordinated with this zero mark or gauge.
So, for example, if we just look at this price data, here, this is the pound against the US dollar. You’ll notice there is an ever so slight bullish crossover here. If we were to take that, which is around about here, price really did not go on the upside– it only went up perhaps one or two candles, and then came back down on the downside. But this crossover was below this zero gauge, so it’s not surprising. We then had this bearish crossover soon after, and price falls heavily on the downside.
We have a similar type of price action here. We have this bearish crossover, right here, but we’re above the zero, so it’s a bit of a phony, or fake signal. It’s right about here, and price really doesn’t fall on the downside very much and at all. We then have this bullish crossover, here, and we’re above the zero, and price moves strongly on the upside.
Obviously, there are signals that so work well that are above or below, and do not coordinate with this zero. Like, we have a bearish crossover here and here, but overall, using this zero mark can help us to iron out any fake signals. We have another bearish signal here, but we’re above the zero and price doesn’t fall on the upside.
Then we have this bullish crossover, we’re above the zero, price moves strongly up. Same sort of thing here. Bearish, and it moves slightly, we then have this bullish, price moves very nicely up. And that continues throughout this chart. Bearish right here, price doesn’t really do anything. We then have this bullish, and we’re above the zero, and price moves up.
So a nice, short video just to end this series. Thank you so much for watching these videos. Much appreciated.