We continue our overview of the binary options’ indicators that can be useful for traders in their work. Today we are considering the McClellan Oscillator indicator. This indicator of technical analysis provides a trader with the opportunity to determine the market range and analyze the ascending and the descending trends in the market. The McClellan Summation Index exists too, and it is the separate indicator.
McClellan Oscillator indicator: description
As we have mentioned above, the McClellan Oscillator binary options’ indicator shows the market’s range and analyzes the assets which have growing or declining prices. This indicator is one of the most widespread and well-known in its category. It was developed by McClellan, who is the famous professional in the field of market analysis, in the 1969. This was the year when two indicators appeared: one of them is an oscillator, another is a summation index.
So, what is included in the McClellan Oscillator binary options’ indicator? The first thing is the difference of price between growing and declining assets. The second thing is the calculation of the exponential moving average with the periods of 19 and 39.
Usage of zero mark
The so-called zero mark is used in the binary options’ indicator and it helps traders to receive signals. Many trading strategies are currently based on this indicator, and these strategies are successfully used by many traders to work in the financial markets.
Usually, the indicator’s oscillations occur between the values of +100 and -100. If the indicator’s line appears in the zone above or below these marks, it means that the trading tool is either overbought or oversold. Therefore, you can wait until the trend’s reversal. Many specialists think that the indicator’s transition from the positive zone to the negative one can be also regarded as important.
Trading signals of technical analysis for McClellan Oscillator
The first signal which has to be considered in work with this McClellan Oscillator binary options’ indicator is the overbought and the oversold zones. Those who have worked with the Stochastic oscillator know how to act at such moments. If the line of the McClellan oscillator appears in the overbought zone, it sends a pretty good signal to buy the Put option.
The fact is that when the line appears in this zone, the signal on the upcoming reverse of the market down appears. But one important circumstance has to be kept in mind. If the trend is strong, any oscillator may stay in the overbought zone for a fairly long time and leave it only on occasion for awhile. At the same time, a trader will not have the opportunity to earn on the market’s reverses.
As for the Call option’s purchase, such opportunity will appear only when the indicator’s line appears in the oversold zone. It means that the market is most likely to reverse up soon. Therefore, you can open a deal. But it is necessary to remember that, as well as with the Put option, if there is the strong descending trend in the market, then the indicator’s line may stay in the oversold zone for a long time, and it would not mean that the appropriate reverse of the market or even the retracement will occur.
For this reason, traders who use this indicator in their work, as well as in their work with other similar binary options’ indicators, use another additional indicator, for example, the trend indicator in order to find out whether there is the trend in the market currently.