Elder impulse system
TrendIntermediate
Alexander Elder's impulse system colors bars from the slope of a short exponential average and the slope of the MACD histogram. Green means both are rising, red means both are falling, and blue means they disagree. It is a permission system: it tells you when not to fight the current impulse, and it is meant to sit on top of another entry rule.
Not investment advice. Nothing here is a recommendation to buy or sell anything. Backtests and historical studies are not guarantees, and a rule that worked in one sample can fail in the next. Trading can lose money. Links are for education, not endorsements. Do your own research.
- Rules
- The common pair is a 13-period EMA and a standard MACD histogram. Do not buy when the bar is red. Do not short when the bar is green. Entries still come from a separate setup, such as a pullback to value. Exit a long if the color turns from green to blue or red, or use the color only as a filter and keep an independent stop.
- Where AI fits
- AI can apply the color filter on top of an existing entry so you can measure whether the filter helps or only reduces trades. It can also check the same rule on a higher timeframe and require the two impulses to agree. Fitting a new EMA length because one color sequence looks clean is the failure mode.
- Markets
- Stocks, futures, and ETFs.
- Timeframes
- Daily, or the timeframe of the setup it is filtering.
- Risks
- The system lags because both inputs are smoothed. A sharp reversal is red only after it has started. Used as a standalone entry it buys every green bar, including late ones. Disagreeing timeframes leave the trader with no trade and no lesson.