Happy New Year Traders!
2017 is going to be super interesting and challenging for binary option traders, if we count EU crises (Brexit, Italian last vote etc..), rate increase of USD, Donald Trump and more reason for the market to become more volatile during 2017.
This year, each analysis will be follow with an overview of one of the indicators or strategies, this week we’ll cover the Moving average indicator.
What is moving average?
Moving average provides binary option traders trend signals by showing the asst trend, it takes the closing price of the last X candles, by default it is set on 20 last candles.
When the chart candles are above the moving average it is an upward trend, when the chart is below the moving average the asset is experience a downward trend.
How to signal with moving averages?
In order to signal with moving average, it is necessary to use another moving average such as 10 last candles.
Moving averages crossover – as binary option trader you can get great benefit by combining moving averages 20 and 10, the result may provide you with signal system that is true for both short and long terms.
Moving averages advantages and disadvantages.
Moving averages are easy to implement and easy to understand and use. when the market switch between trends, moving averages are great signal tool in any time frame.
But, like everything in life nothing is perfect, the moving averages might not be as useful when the market is switch to a nuetral trend where basically each signal get the opposite result.
When you get experience in the market and know when a neutral trend begins and when it ends, it is a powerful signal tool.
The crossover between averages optimize the signal for a trade, it triggers a switch between trends on a perfect timing.
Let’s review some of the examples from last week and analyse the market for next week.
EURUSD – moving average
In the daily chart below, there are two moving averages, the yellow moving average is the short one – last 7 days, the light blue is the long term – last 14 days.
All four triggers in the chart are winners, the trigger is fired at the end of each candle while there is a cross between the moving average, when short MA crosses the long MA from below it is a Buy signal and vice versa for Put options.
in order to optimize the trigger provided by moving averages it is recommended to combine it with another strategy or indicator, that way you increase the chances to win the option.
Moving average signals on 60 second chart
In the below EURUSD 60 second chart the signals act the same, it provides nice success rates, here are another four winning triggers for binary options:
If you want to learn some more on moving averages here is a source for recommended article.
As for next week, EURUSD almost shows a cross between moving averages, yet, on a weekly trend the EURUSD experience a downward trend, it means that even if moving averages are cross i’d expect a neutral trend before it switch to an uptrend.
EURUSD daily chart
On the weekly chart there is almost a cros between moving averages showing that the decreasing trend is might end, the best use for this is to seek uptrend signals on short term time frames
GBPUSD weekly chart
The most interesting asset for this week is the S&P showing a cross between moving averages and it seems that for now the upward trend has ended at least for the short term while a downward trend has just initiated
Wishing you a successful year, if you have ny questions just leave me a comment.