Indicator: Elder Impulse System

The Elder Impulse System indicator identifies trend inflection points by combining price momentum and trend following to help traders enter trades during strong impulses and exit when momentum fades.

Usage

The Usage section describes how the script can be used to identify market conditions based on the alignment of trend and momentum.

• Bullish Impulse (Green): Occurs when the 13-period EMA is rising and the MACD-Histogram is also rising. This indicates that both the trend and momentum are favoring the upside.
• Bearish Impulse (Red): Occurs when the 13-period EMA is falling and the MACD-Histogram is also falling. This indicates that both the trend and momentum are favoring the downside.
• Neutral (Blue): Occurs when the EMA and MACD-Histogram are moving in opposite directions. This suggests a lack of clear impulse and often appears during consolidations or potential reversals.

Traders typically use the green bars as a signal to look for long entries and red bars for short entries. The appearance of a blue bar often serves as an early warning to exit a position or tighten stop losses.

Details

The Elder Impulse System, developed by Alexander Elder, is designed to highlight periods where a trend speeds up or slows down. It utilizes two specific components to filter market noise:

1. Exponential Moving Average (EMA): By default, a 13-period EMA is used to track the trend. If the EMA is higher than the previous bar, the trend is considered up.
2. MACD-Histogram: This component measures the change in power between buyers and sellers. If the MACD-Histogram is higher than the previous bar, momentum is increasing.

The system requires both the trend (EMA) and momentum (MACD) to agree to generate a directional signal. This multi-factor approach aims to prevent traders from entering trades against the prevailing momentum of the market.

Settings

• Use Custom Resolution: Enables the indicator to calculate data from a timeframe different from the current chart.
• Custom Resolution: Defines the specific timeframe used for calculations when "Use Custom Resolution" is active.
• Show Color Bars: When enabled, the indicator will change the color of the price bars to match the impulse signals (Green, Red, or Blue).
• EMA Length: Adjusts the period of the Exponential Moving Average used to determine the trend direction.
• MACD Fast Length: The period for the shorter-term EMA used in the MACD calculation.
• MACD Slow Length: The period for the longer-term EMA used in the MACD calculation.
• MACD Signal Length: The period for the signal line SMA used within the MACD-Histogram calculation.

FAQ

What does a blue bar indicate? A blue bar indicates a neutral state where the trend (EMA) and momentum (MACD-Histogram) are in conflict. It suggests that the strong impulse has paused or is losing strength.

Can I use this for multi-timeframe analysis? Yes, by enabling the "Use Custom Resolution" setting, you can view the Elder Impulse signals from a higher timeframe (such as Daily) while trading on a lower timeframe (such as 15-minute).

How do I access the Elder Impulse System? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.