Most binary options traders move fast and make quick decisions. Still, it doesn’t mean that there is no place for technical analysis. The Moving Average + CCI binary options strategy is easy to set up and can offer trading signals to confirm your ideas. Let’s dig in to see how it works and decide if this strategy is worth including in your trading routine.
Moving Average + CCI combo: How Does It Work?
This strategy can help traders achieve two main goals: identify the direction of the main trend and spot the optimal moment to enter a trade.
Identifying the general direction of the trend can help traders choose whether to open a BUY or a SELL position. To achieve this, you can use the Moving Average indicator (MA) — one of the best technical analysis tools for the purpose of understanding the trend direction. However, it does not show traders the ideal point to enter a new deal.
This is where the CCI indicator comes in and finishes the job. It assesses the current trend and points to potential entry and exit points. By applying the Moving Average and CCI indicator together, you can build an effective trading system that will help you make better decisions and save time.
The Strategy Set-Up
The most commonly used periods for setting up the Moving Average are 50, 100 and 200. For this strategy, start by applying the period of 50 in the IQ Option traderoom. For CCI, keep the default settings: the period of 14 and the overbought level of 100.
The classic method involves the application of the Moving Average + CCI binary options strategy on daily price charts. If you want to experiment with smaller timeframes, try changing the period of the MA: for 4-hour candlesticks it will be 100, for 1-hour and below — 200, the CCI indicator stays at the same 14 period. You can also test different settings for the CCI indicator, but don’t look for values of the period above 24.
Normally, this indicator combo can point to the trend moving upward (bullish market sentiment) or downward (bearish sentiment). Here is how to understand its signals that may be worth including in your decision-making process.
Moving Average + CCI binary options strategy: Uptrend
1. The first signal of an emerging upward trend is when a candlestick crosses the MA line and closes above it.
2. Soon after that, the CCI readings should move above 100.
3. When it crosses the 100 value and keeps going up, it could be the time to enter a long trade. Some traders prefer to make a move during the next 3–4 candles.
Moving Average + CCI binary options strategy: Downtrend
1. When the MA line crosses the price candle and moves lower, it may point to an upcoming downtrend. Look for the candle that closes below the MA line.
2. To confirm your readings, check the CCI indicator’s signals. When it moves below 100, consider entering a short position in the next 3–4 candles.
Ready to rock the markets with this unique and effective indicator combo? Try the Moving Average + CCI binary options strategy today to better understand the trends and get positive results when trading binary options on IQ Option.
