ICTProTools | ICT Insight - Momentum Structures

6 dic

🚀 INTRODUCTION

The Momentum Structures Indicator builds upon the principles of ICT (Inner Circle Trader) and Smart Money Concepts (SMC) to give traders a clearer view of market dynamics. These methods reveal how institutional trading activity shapes price movements, particularly through different types of market liquidity.

The indicator is designed to provide traders with advanced insights into market dynamics by focusing on key price imbalances and higher-timeframe structures. By combining these elements, the indicator allows users to analyze price behavior across multiple timeframes, helping them anticipate potential liquidity pools and price reversals. The emphasis on price imbalances and liquidity zones makes it a versatile tool for both intraday and longer-term strategies, providing critical insights for understanding market cycles and potential turning points.


💎 FEATURES

Imbalance Bar Colors / Zones

Imbalances are fundamental components of the ICT methodology, highlighting areas where price accelerates, creating gaps that may indicate a lack of liquidity. These voids often point to potential reversal or continuation zones in the price action.

An imbalance typically arises when supply and demand are out of balance, resulting in a gap between price levels. Traders keep a close eye on these gaps, as they could present opportunities to enter trades when the price revisits them, as they suggest a strong institutional interest.

We can notice two types of imbalances… A Fair Value Gap (FVG) usually forms from three consecutive candles, defining the space between the wicks of the first and last candle. Conversely, a Volume Imbalance (VI) occurs when a gap appears between the opening and closing prices of two consecutive candles. When these imbalances align with FVGs, they offer a well-rounded framework for assessing market strength.

By analyzing both FVGs and VIs together, traders can gain valuable insight into potential price movements and better evaluate the likelihood of continuation or reversal.

This chart illustrates the Fair Value Gaps (FVG) and Volume Imbalances (VI) within the GBPUSD price action. The FVG Bar Color and FVG Zone represent the same Fair Value Gaps, and similarly, the VI Bar Color and VI Zone display the same Volume Imbalances. They highlight areas where rapid price movements have created gaps in the market. These gaps indicate potential zones for trade entries or exits as the price may return to fill them. As we can see on the chart, the major part of imbalances created has already been filled. They constitute really interesting Point of Interest (POI).

The 50% FVG line marks the midpoint of the gap, which is often considered an important level for price action. A clear example appears in the Bearish FVG on the top left, where price first filled it below the midline, creating a small reaction. The price then liquidated this "fake mitigation" by moving just above the midline before beginning its significant downward movement. This demonstrates the crucial role of imbalances and how precisely price interacts with them.

Traders can use this information to identify potential buying or selling opportunities based on the interaction of price with these gaps and volume imbalances, aiding in the development of their trading strategies.

PO3 Candles (Power of Three)

The Power of Three is a critical concept in the ICT methodology that analyzes Higher Timeframe (HTF) candles focusing on the opening price, high wick, low wick, and closing price. This framework helps traders understand the current market cycle, in three phases, and its trading implications.

1. Accumulation Phase: In this initial phase, the price consolidates around the opening price as the market gathers liquidity. This often signals that larger players are positioning for the next move.
2. Manipulation Phase: Represented by the candle wicks, this phase indicates the extreme points where liquidity grabs often occur. Observing these wicks helps traders identify the end of the accumulation phase and potential turning points.
3. Distribution Phase: The candle body reflects a decisive price movement in one direction, following accumulation and manipulation. Traders align with the direction of this phase to capture the “real candle move”.

Our indicator provides you with the valuable capability to integrate the True Day Range, as defined by ICT. This concept, rooted in institutional logic, defines a trading day as starting at 00:00 New York time. You can customize it to match your trading style and analysis needs.

You can also overlay imbalances (FVG and VI) directly onto PO3 Candles, seamlessly combining imbalance detection with high-timeframe price action. This approach gives you a sharper market perspective, uncovering potential turning points with greater clarity.

In summary, PO3 Candles help traders assess the market structure and identify cycle positions on HTF candles, enabling them to make more strategic trading decisions, which allows for better entry and exit timing, avoiding traps, and seizing the best opportunities to capture significant market moves.

This chart illustrates the application of the Power of Three concept to EURUSD price action, highlighting key phases of market behavior.

In this example, we observe the Daily candles, where a significant Bullish imbalance appears from previous days, forming a Fair Value Gap (FVG). Additionally, there’s a small Volume Imbalance (VI) at the candle's opening, signaling liquidity that the price needs to fill.

Now, focusing on the Weekly candle, we can clearly identify its phases. First, there's an accumulation phase around the opening price, which, as shown by the Daily candles, took some time to develop. Then, the manipulation phase occurs, signaled by the upper wick of the Weekly candle, which liquidates the previously created accumulation. It’s time to look for a potential selling position... Finally, the price falls, beginning to form its bearish body and completing the real move of the week.

This framework allows traders to better understand the market structure and make informed decisions based on the current cycle.

Standard Deviation (STD)

The Standard Deviation (STD) is a concept within the ICT methodology that focuses on identifying periods of consolidation within the market. Specifically, it examines the Central Bank Dealers Range (CBDR), which occurs between 13:00 and 23:00 New York time. During this period, the market often exhibits consolidation, creating an environment where price action stabilizes before making significant moves.

This consolidation forms the basis of the Standard Deviation (STD) concept. This is based on the idea that the volatility observed during this consolidation phase can be used to anticipate future market volatility. Once this consolidation is identified, the STD framework duplicates the established range both above and below the consolidation area.

As price approaches these duplicated levels, it offers traders critical information on where to anticipate potential reactions. If the price nears the upper boundary of the consolidation, it suggests a potential reversal point, indicating an opportunity to consider selling. Conversely, if the price approaches the lower boundary, it may signal an opportunity to look for buying positions. This duplication could enable traders to determine potential high and low points for the trading day or week for example.

Finally, the Standard Deviation (STD) concept provides a valuable framework for identifying potential key reaction points in the market by leveraging consolidation within the CBDR. By duplicating these ranges, traders can anticipate significant price movements and refine their strategies.

This chart illustrates the Standard Deviation (STD) concept applied to EURUSD price action. The highlighted areas in blue indicate high duplications and low duplications derived from the consolidation identified during the Central Bank Dealing Range (CBDR), marked by the dark gray rectangle.

The high duplications represent potential resistance levels, suggesting areas where the price may encounter selling pressure, while the low duplications signify potential support levels, indicating where buying interest could emerge.

The annotations emphasize how price reacts at these duplicated levels, showing the critical role of the STD in determining where price movements may stall or reverse. In this example, the price responded perfectly to both an upward and a downward duplication, confirming that these levels could represent the day's high and low, an observation validated here. This highlights the precision of price movements, with the price stopping exactly at the full duplication levels (but we can not that the price could also have paused at the midline levels, indicated by the dashed gray lines).

This visualization helps traders anticipate potential reactions and align their strategies with market dynamics, ensuring informed decision-making based on established price behavior.

✨ SETTINGS

• Imbalance Bar Colors / Zones: Choose to display FVGs, VIs, or both, with customizable color settings. Choose to extend zones or set them to be removed when mitigated.
  
• PO3 Candles: Customize the PO3 Candles for different timeframes (Daily, Weekly, Monthly), including the calculation Mode (Classic or True Day Range) and timezone associated, and set your body, border, and wick preferred colors. The Imbalance Bar Color and FVG Zones can also be displayed on these HTF candles, as they are configured in their settings.
  
• STD: Select the timeframe on which to base it and configure the number of duplications and midline settings. You can also define the time range and timezone related to consolidation detection, giving you control over when and where the STD should apply.
  

🎯 CONCLUSION

The Momentum Structures Indicator combines the core principles of ICT and Smart Money Concepts to provide traders with advanced tools for understanding market dynamics. By focusing on key elements like imbalances and liquidity zones, it offers a comprehensive framework for analyzing price behavior. This indicator empowers traders to identify key market phases, anticipate potential reversals, and refine their entry and exit points with precision. While its features provide a valuable edge, it’s essential to remember that none should be used on its own and many more factors go into being a profitable trader.


✅ HOW TO GET ACCESS

Check the Author’s instructions below to get instant access to this indicator & our Premium Tools.