The Elder Impulse System is a trading strategy developed by Dr. Alexander Elder. It helps traders to generate clear buy and sell signals by using a combination of trend-following indicators and momentum indicators. The system’s focus is on identifying the strength of the current trend and using that information to make trading decisions. It’s simple to understand and apply, making it ideal for traders at any level.

What Is the Elder Impulse System?

The Elder Impulse System is a trading strategy that helps traders spot market trends by using a combination of indicators. The system uses the 13-period Exponential Moving Average (EMA) to determine the trend direction and the Elder Ray Oscillator to measure the momentum behind the trend. By combining these two elements, traders can generate buy and sell signals with greater accuracy.

How Does the Elder Impulse System Work?

The Elder Impulse System works by using two main components:
1. 13-Period Exponential Moving Average (EMA): This moving average helps you determine the current trend. If the price is above the 13-EMA, it’s a bullish trend. If the price is below, it’s a bearish trend.
2. Elder Ray Oscillator: This momentum indicator is used to measure the strength of the trend. The Bull Power indicates buying pressure, while the Bear Power shows selling pressure. When the Bull Power is greater than the Bear Power, it signals that buyers are in control, and vice versa.

How to Apply the Elder Impulse System for Buy Signals?

To apply the Elder Impulse System for buy signals:
1. Trend Direction: Check if the price is above the 13-period EMA. If it is, this indicates a bullish trend.
2. Momentum Check: Look at the Elder Ray Oscillator. If the Bull Power is greater than the Bear Power and both are above zero, this is a strong buy signal.
3. Confirmation: Wait for the price to break above recent resistance levels. Once this happens, it confirms the buy signal and you can enter the trade.

How to Apply the Elder Impulse System for Sell Signals?

For sell signals using the Elder Impulse System:
1. Trend Direction: Ensure that the price is below the 13-period EMA, indicating a bearish trend.
2. Momentum Check: Look at the Elder Ray Oscillator. If the Bear Power is greater than the Bull Power and both are below zero, it signals a strong sell opportunity.
3. Confirmation: Wait for the price to break below recent support levels. Once this happens, it confirms the sell signal and you can exit the trade.

When to Avoid Trading with the Elder Impulse System?

While the Elder Impulse System is effective, there are situations where it’s best to avoid trading:
1. Sideways Market: When the price is moving sideways (consolidating) and there’s no clear trend, avoid trading as the signals may be unreliable.
2. Weak Momentum: If the Bull Power or Bear Power is weak and near zero, it indicates indecision in the market and is a sign to stay out of trades.
3. Overbought or Oversold Conditions: If the market is in overbought or oversold conditions, the price could reverse quickly, and it’s better to avoid entering trades.

How to Combine the Elder Impulse System with Other Indicators?

You can improve the effectiveness of the Elder Impulse System by combining it with other indicators:
1. RSI (Relative Strength Index): Use RSI to check for overbought or oversold conditions. This can help you confirm the strength of the trend identified by the Elder Impulse System.
2. MACD (Moving Average Convergence Divergence): MACD can provide further insight into the momentum and trend direction. A MACD crossover can confirm the signals from the Elder Impulse System.
3. Volume Analysis: Monitor trading volume to confirm price movements. Strong volume accompanying a buy or sell signal can indicate a higher probability of success.