Elder Impulse System - Introduction

The Elder Impulse System was designed by Dr. Alexander Elder and presented in his book Come Into My Trading Room. According to Mr. Elder. "The system identifies the point of change when a trend accelerates or slows down".

This system is based on two indicators, the 13 EMA and the MACD-histogram. EMA determines trend, while MACD-histogram measures momentum - momentum. As such, the Elder Impulse system combines trend trading and momentum to determine the direction of the force to follow. The article incorporates some more code to color the price bar to make it easier on the eyes

Elder Impulse System - Colors in Posts

Note the colors to distinguish clearly
  • Green price bar: created when the 13 EMA rises from the previous period AND the MACD histogram is up from the previous period
  • The price bar is red: created when the 13 EMA falls from the previous period AND the MACD histogram decreases from the previous period
  • The blue price bar creates when the two above price bars are ineligible for creation.
  • The MACD histogram here is MACD (12,26,9)
Some points to remember
  • The green bar shows that the bulls are in control of trend and momentum, as both the 13 EMA and the MACD histogram are bullish.
  • The red bar shows that the sellers are in control as the 13 EMA and the MACD Histogram are both declining.
  • The blue price bar shows chaos and neither side is in control of the trend

Elder Impulse System - Timeframe (Timeframe)

The Elder Impulse System can be used on many different timeframes but needs to trade in favor of a larger trend. Elder recommends using a timeframe you or a transaction called medium-term. Multiply that time frame by 5 times and make a long-term time frame for you. Traders who trade on day frames should look at the weekly frame. Traders using the 10-minute frame should look at the 1-hour frame...

Once a long-term time frame is defined, a trader can use it to determine a major trend.

It is possible to use only 1 chart to view both timeframes.

As the example below, use the 65 EMA (5 times EMA 13) and MACD (1.65.1) on the daily timeframe to see the trend for the weekly timeframe.

Another way to determine the weekly trend is to use MACD (1.65,1) and wait for it to cross the zero level in the middle. We will use this technique in this article to simplify the discussion on charts

Elder Impulse system - Entry and exit points

A buy entry point occurs when both conditions 1 are met (condition 1 first and condition 2).
  1. The long-term trend is bullish
  2. The Elder Impulse system provides a buy signal in the medium term (the frame we trade).
A sell entry point occurs when both condition 1 first and condition 2 are met at the same time.
  1. The long-term trend is bearish
  2. The Elder Impulse system provides a sell signal in the medium term (the frame we trade).

On the daily chart above, we use MACD (1.65.1) to view the weekly trend.
  • If the MACD is above 0, the weekly trend is bullish.
  • If the MACD is below zero, the weekly trend is bearish
Based on that, the 3 green arrows on the chart are valid to buy signals. The first few sell signals (red bars) are NOT valid sell signals as the weekly trend is still bullish (based on MACD). The red arrow shows the first valid sell signal after the weekly MACD drops below zero. Likewise, the weekly trend needs to turn bullish for the next buy signal to be valid, as shown through 3 arrows. green name at the end.

Elder Impulse System - Conclusion

The Elder Impulse system is designed to capture short fluctuations. "The Elder Impulse system encourages you to enter cautiously but exit quickly. It is a very professional trading approach that is completely different from the amateur style," notes Mr. Elder immediately after the system. jump into trading without thinking much and not knowing when to get out, then hope and wait until the market goes in the direction they want "

The Elder Impulse System can also be used to avoid bad trades by checking before entering orders. The Elder Impulse system helps traders see long-term trends before looking for entry points. The Elder Impulse System can be combined to predict price patterns or reversal zones. For example, if you think the bullish flag pattern is forming or the price is close to the support zone by the Fibonacci retracement, you can wait for the Elder Impulse system to confirm the reversal in order to increase the certainty.

Anyone who uses MACD histogram on MT4, look for the OSMA indicator