| Updated: October 30, 2024For this strategy we will utilize only one technical indicator, the Moving Average Convergence Divergence (MACD). For a detailed overview of the MACD, you can read the article in our Forex Academy.
The time frame is set to 1 minute, while the expiry time is 2 minutes. For our purpose we need to modify the settings of the MACD. The default configuration is short-term (12), long-term (26) and MACD periods (9). We change it as follows: short-term (9), long-term (20) and MACD periods (3). In addition, the MACD main line is set as red, while the MACD signal line is set as white.
In order to make trading decisions, one needs to take into account the following conditions:
If he/she is to buy a Call option:
1. The MACD main line (red) needs to cross the MACD signal line (white) in a bottom-up manner and
2. There is a candlestick/bar above the cross spot, which correlates with the direction of the MACD main line. In this case – a bull-trend bar.
If he/she is to buy a Put option:
1. The MACD main line (red) needs to cross the MACD signal line (white) in a top-down manner and
2. There is a candlestick/bar above the cross spot, which correlates with the direction of the MACD main line. In this case – a bear-trend bar.
You should make sure that both conditions are present before you make your entry.
On the 1-minute chart of NZD/USD above the small triangles indicate where a call and a put entry (2 calls, 2 puts) should be made.