But there is a better way of using MACD with the Alligator indicator. You see, MACD strategy with its zero line rule, gives entry signals when the pullback is big in a trend. But if the pullback is big, the Alligator Indicator shows an opposite trend. So instead of using alligator and MACD at the same time, you can use the MACD strategy with all its rules that made it a high win rate strategy and use the Alligator indicator on the higher timeframe to filter the range and slow market.
For example, here, if we remove the alligator indicator on the 30 minutes entry timeframe, we can clearly see MACD is giving a long crossover above the 200 EMA. To make sure the price is not in a slow or a range market, we will switch to a higher timeframe like 4h. As we can see, Alligator on the higher timeframe is also indicating a good uptrend with its mouth open. So taking the entry signal on the entry timeframe is a good idea. In the first scenario, the Alligator was filtering MACD signals. But in the second scenario, Alligator was confirming the MACD entry signal.
But if we scroll to the left on the 4h timeframe on the same chart, we can see that when the market was in a range, the mouth of the Alligator was pretty much closed and the Alligator indicator was not indicating any trend. In other words, by using the Alligator indicator on the higher timeframe, you are also avoiding false MACD or other entry signals by filtering the range and slow-moving markets, that some beginner may find difficult to spot just by looking at the entry timeframe. Experience traders can also filter these range markets with the 200 EMA of course. As I said in the MACD video, when the 200 Exponential Moving Average looks flat, don’t take any MACD trades.
Alligator Indicator, on the other hand, makes things easier with its alligator mouth open mouth close analogy. But if you want to see what happens, if we use MACD without its zero line rule to fit with the Alligator indicator on the same timeframe, we will take 100 Trades with it in the next video and also find its win rate.