Combining MACD Divergence with the Elder Impulse System

Summary

This indicator note combines MACD momentum, price trend, and the Elder Impulse System to help identify possible entry and exit conditions. The author describes using it on the DAX at one- and five-minute intervals, while suggesting it might also apply on longer timeframes. Green bars indicate rising trend and momentum, red bars falling trend and momentum, and blue bars a change or disagreement between them. The author looks for multiple same-color bars and treats a turn against an open position as an exit cue.

The indicator also marks bullish and bearish MACD divergences using a zero-lag MACD construction and comparisons between price swings and oscillator swings. The author stresses that MACD is a complement rather than a standalone entry signal and recommends visually checking divergences. The note offers personal experience, not systematic test results, and gives no quantified performance or risk measures. Its thresholds, timeframe, and interpretation may not generalize across instruments or market conditions.

Key ideas

• The Elder Impulse System combines trend direction with momentum to color bars as bullish, bearish, or transitional.
• The author uses consecutive green or red bars as confirmation, while treating the indicator as one input among several.
• MACD histogram movement and divergences provide additional context for possible setups.
• The author suggests exiting a long position when the impulse bar turns bearish.
• The method is described from personal use on the DAX and is not supported by quantified performance evidence.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.