Employing the MACD technical oscillator with the ICT indicators together can seem like a seriously greedy trading approach. But it is possible to combine the power of these tools, one on the technical side and the other on the conceptual side.
In this guide, we will study the potential uses of both concepts to exploit divergences and crossovers like a pro.
MACD and ICT
MACD is an oscillator that works based on the relationship between two moving averages, letting traders find a signal in potential divergences and crossovers. It is made of three components:
- Histogram.
- MACD Line.
- Signal Line.
ICT is a conceptual framework for analyzing the market structure, trying to understand the psychology and behavior behind the price action across different but repetitive patterns. ICT does not employ technical indicators. However, combining both methods is possible and will add a layer of confirmation for analyzing a crypto asset.
Within the options of ICT indicators to use with MACD, let’s see:
- Swing High/Lows: A Swing High represents a point in the chart where the price made a higher high. A Swing Low represents a point at which the price made a lower low.
- Equal High/Lows: These are points that the price has reached more the once at almost equal quotation. Typically, they represent resistance or support areas.
Check out also: ICT Indicators for Crypto Trading!
Using ICT and MACD Like A Pro
The concepts of swing and equal high/lows with MACD can help identify divergences and potential price action over a zone of major buying or selling pressure. Traders can exploit key market scenarios by applying both approaches properly.
Let’s embark on some examples.
MACD Divergence and ICT:
Traders can identify bullish and bearish opportunities by identifying price swings that differ from the MACD, revealing a divergence. For example:
- A bullish divergence takes place when the price is making lower lows while MACD starts to make higher lows. If this occurs in a potential support area, then it strengthens the bullish signal.
Equal Highs/Lows and MACD:
The interests of most participants over specific areas or prices will lead to potential buying or selling pressure from institutional traders according to ICT.
Equal highs and lows might represent some of these zones, where the price cannot break through.
Traders can use MACD for confirmation around these zones:
- For example: If the price breaks a resistance, then it is expected to be turned to support. A MACD bullish crossover in this support area during equal lows formation might indicate stronger buying pressure.
Learn more about MACD crypto trading strategy at Altrady!
Price Action Confirmation
Consider looking for bullish and bearish candlestick patterns around equal highs and lows zones alongside the MACD entry signal.
From the example exposed previously, you could indentify Hammers and engulfing bullish candlesticks.
Also, consider timing entry and exit points. ICT focuses on zones for potential price action according to its concepts and MACD can help with precise timing within those zones.
Conclusion and Call To Action
While ICT is a price action analysis framework, MACD offers momentum and divergence signals. By identifying swing and equal high/lows, traders can confirm relevant areas of support and resistance as well as detect divergences in the MACD.
In Altrady you can use MACD, ICT, and multiple charting tools by signing up for a free trial account with paper trading.
