The MACD indicator in the IQ Option platform is a technical instrument that lets merchants track buy-and-sell signals in a real time mode. This tool is highly useful in trending pipelines, which are characterized by fluctuation between the intervention price rate and the resistance price rate. The index is used to identify the current trend, its efficiency and the possibility of its reversal.
How MACD Operates
This trading element consists of a MACD path, a signal path and a bar chart. The MACD line shows the divide between two sliding averages with separate period lengths. It reflects, how close these two branches are disposed on the graphic and where they tend to move. For instance, the MACD index can show you that the lines are getting closer or, on the contrary, farther apart from each other.
This element can be circularized by withholding the rate of the longer EMA path from the rate of the shorter one. The latter is constantly moving toward and, therefore, digressing from the second line. This is why the MACD indicator hovers around the reference level. The two paths create the so-called ‘signal line’. The large the divide between this couple of the sliding averages (we call them “EMA”),the further the MACD chart is from the zero line. As distinguished from other oscillators, which tend to fall in the range of the reference level, this technical index doesn’t have explicit overbought and resold sectors.
What MACD Line Values Show
In order to get the most out of this technical element, you should understand what it meant in different positions. Let us consider all of them:
When this path touches the zero line, it reflects only that the two EMA patterns are crossing and their rates are equal.
When the branch is positive and moving upwards, you can conclude that the pipeline’s bullish impulse is about to pick up steam.
The inverse and descending line is an evident indicator of the bearish impact, which is accelerating within the limits of the current marketplace.
If the MACD path is over zero, but decelerating, it shows that the bullish impulse is easing off in the current economical scene.
The negative, but uprising chart is a sign of the bearish momentum receding in the marketplace.
It’s worth noting that the MACD index is estimated in the same units as the corresponding pipeline’s price, such as rubles or dollars. Notionally, this element has no limits, as the two EMA lines can actually move as far from one another as possible. In practice, however, the MACD path tends to backtrack to the reference level again and again.
While trading at the platform of IQ Option, one shouldn’t use this index in isolation, as it cannot guarantee the absolute accuracy of its predictions. Combine this technical element with others, and make conclusions based of several factors – it’s the best way to seal yourself from possible mistakes and money losses.