Elder Impulse System Indicator: Master Momentum Trading with Color-Coded Signals on TradingView

Tired of missing momentum shifts until it's too late? The Elder Impulse System transforms your TradingView charts into a momentum-reading machine using simple color-coded bars. Dr. Alexander Elder's brilliant creation combines MACD and EMA signals into one powerful visual indicator that instantly shows you when bulls or bears are taking control.

Instead of juggling multiple indicators and second-guessing momentum, you'll know exactly when real moves are starting—and when they're running out of steam.

What is the Elder Impulse System Indicator?

The Elder Impulse System is a momentum indicator that paints your price bars different colors based on whether two key technical signals are working together or fighting each other:

• EMA (Exponential Moving Average) – tracks the overall trend direction
• MACD Histogram – measures momentum strength and changes

Here's how Dr. Alexander Elder's system works: when both indicators point in the same direction, you get a clear momentum signal. When they disagree, the market is in a transition phase where anything can happen.

The color coding is straightforward:

• Green bars = bullish momentum (both EMA and MACD histogram rising)
• Red bars = bearish momentum (both EMA and MACD histogram falling)
• Blue bars = mixed signals (one rising, one falling - proceed with caution)

Think of it like a traffic light for momentum. Green means go, red means stop, and blue means yield. This visual approach makes it much easier to spot when real momentum is building versus when the market is just chopping around.

What is Pineify?

Pineify is a straightforward way to build and test TradingView indicators without getting stuck on code. Grab ready-made scripts (like Elder Impulse System), tweak settings, and export clean Pine Script you can edit in TradingView. If you're learning, you'll find step-by-step guides. If you're experienced, you'll appreciate that things just work.

How to add Elder Impulse System Indicator to TradingView?

Adding the Elder Impulse System to your TradingView charts is straightforward with Pineify:

1. Visit Pineify Editor: Go to the Pineify platform and access the Pine Script editor
2. Search for Elder Impulse System: Use the search function to find the indicator template
3. Generate or Copy Code: Use our Elder Impulse System template or customize your own version
4. Open TradingView: Navigate to your TradingView chart
5. Pine Script Editor: Click on the "Pine Script Editor" tab at the bottom of your screen
6. Paste Code: Copy the Elder Impulse System Pine Script code and paste it into the editor
7. Save and Apply: Click "Save" and then "Add to Chart"

The indicator will color your price bars directly on the chart. Green (or teal) bars show bullish momentum, red bars show bearish momentum, and blue bars indicate neutral or mixed conditions.

How to Use the Elder Impulse System Indicator

Here's your practical guide to reading and trading with the Elder Impulse System:

Understanding the Color Signals

• Green bars = bullish momentum (both trend and momentum pointing up)
• Red bars = bearish momentum (both trend and momentum pointing down)
• Blue bars = mixed signals (trend and momentum disagree - stay cautious)

Smart Entry Strategies

• Going long: Look for green bars appearing after blue or red periods. The best setups happen when green shows up at key support levels or after healthy pullbacks in uptrends.
• Going short: Watch for red bars emerging after green or blue phases. Strongest signals occur when red appears at resistance or during bounces in downtrends.
• What to avoid: Skip trading during extended blue bar periods—the market is indecisive and likely to whipsaw you.

Exit and Position Management

• Holding winners: Stay in long positions while bars remain green. Consider taking partial profits when the first blue bar appears.
• Cutting losses: Exit longs (or tighten stops) when red bars show up—momentum has clearly shifted against you.
• Short positions: Same logic in reverse—hold through red, exit when green appears.

Powerful Combinations That Work The Elder Impulse System becomes even more effective when combined with other indicators. Consider pairing it with:

• Trend filters: Use alongside swing trading indicators to avoid counter-trend trades
• Volume confirmation: Add the Elder Force Index to see if real buying or selling pressure backs the momentum
• Multiple timeframes: Check daily charts for overall bias, then use 1-hour or 4-hour Elder Impulse for precise timing

Avoiding Common Traps

• Don't chase momentum late in a color sequence—wait for fresh color changes after neutral periods
• In choppy, sideways markets, you'll see rapid color switching. Filter these with price structure analysis or wait for clearer trending conditions
• Use higher timeframes to reduce noise and false signals

Optimal Elder Impulse System Settings for Different Trading Styles

The default settings work great for most traders, but you can fine-tune them based on your specific approach:

Standard Parameters (Great Starting Point)

• MACD Fast: 12
• MACD Slow: 26
• MACD Signal: 9
• EMA Length: 13

Settings by Trading Style

• Scalping (1-5 minute charts): MACD (8,17,6), EMA 8 → Faster signals but expect more noise
• Day trading (5 minute to 1 hour): Default settings (12,26,9, EMA 13) → Well-balanced approach
• Swing trading (4 hour to daily): MACD (12,26,9), EMA 21 → Smoother signals, fewer false alarms
• Position trading (daily to weekly): MACD (19,39,9), EMA 50 → Slowest but cleanest trend signals

Visual Customization Options

• Adjust bar colors to match your chart theme (green/red or teal/red/blue combinations)
• Some traders prefer plotting the system as background colors instead of coloring the actual price bars
• You can add a separate panel showing the raw MACD and EMA values if you want to see the underlying calculations

Pro Testing Tip: Always start with the default settings and only adjust if you're consistently seeing issues in your specific market. Before making any changes, run proper backtests to validate your modifications. For a complete guide on testing strategies effectively, check out how to backtest trading strategies.

How to Backtest the Elder Impulse System Indicator

Using Pineify's strategy editor, you can build and test complete trading systems based on the Elder Impulse System. Here's a practical framework to get you started:

Entry Conditions to Test

• Long entries: Enter when bars turn green after being blue or red for at least 2 consecutive bars
• Short entries: Enter when bars turn red after being green or blue for at least 2 consecutive bars
• Trend filter: Only trade in the direction of the higher timeframe trend to improve win rates

Exit and Risk Management Rules

• Entry execution: Use market orders when color changes occur for immediate fills
• Profit taking: Exit partial positions when the first neutral (blue) bar appears; close remaining position when opposite color shows up
• Stop losses: Place protective stops below recent swing lows (for longs) or above recent swing highs (for shorts)
• Trailing stops: Move stops in your favor as new highs/lows form while bars maintain the same color

Key Variables to Test

• Performance with and without trend filters (like 200 EMA or ADX)
• Different MACD and EMA parameter combinations optimized for your specific market
• Holding through neutral bars versus exiting immediately on the first blue bar
• Performance across different timeframes and market conditions (trending versus ranging markets)

Important Metrics to Track

• Win rate specifically on color change entries
• Average holding time per color sequence
• Performance difference between early versus late entries in a color sequence
• Maximum adverse excursion (how much drawdown you experience before reaching profit)

Testing Best Practices: Always change one variable at a time and document your results carefully. For a comprehensive approach to strategy validation, explore backtesting in trading to understand the complete process.

Frequently Asked Questions About the Elder Impulse System

Q: What makes the Elder Impulse System different from just using MACD alone? A: The Elder Impulse System combines MACD with an EMA and displays the result as intuitive color-coded bars, making momentum shifts immediately visible. Regular MACD requires you to interpret histogram and signal lines separately, which can be confusing and slower to read.

Q: Can I use the Elder Impulse System on all markets and timeframes? A: Absolutely. It works effectively on stocks, forex, commodities, and crypto across all timeframes. However, you may need to adjust the EMA and MACD periods for different markets and timeframes to optimize performance.

Q: How can I avoid getting whipsawed by false signals? A: Use the indicator on higher timeframes to reduce noise, add a trend filter for confirmation, and wait for at least 2 consecutive bars of the same color before entering trades. Avoid trading during periods of rapid color switching, which indicates choppy, indecisive markets.

Q: Should I exit my position immediately when bars turn neutral (blue)? A: Not necessarily. Many successful traders hold through one or two neutral bars and only exit when the opposite color appears. Test both approaches with your specific strategy to see what works better for your trading style and risk tolerance.

Q: Does the Elder Impulse System work better for long or short positions? A: The system is completely neutral and works equally well for both directions. Performance depends on overall market conditions and your trend bias. In strong bull markets, green signals naturally perform better, while red signals excel in bear markets.

Q: What other indicators pair well with the Elder Impulse System? A: It combines excellently with trend filters (like ADX or moving averages), volume indicators (such as the Elder Force Index), and traditional support/resistance levels. The key is not to overcomplicate—choose one or two complementary tools maximum.

Q: How do I know if the Elder Impulse System is working in my market? A: Backtest it thoroughly on historical data in your specific market and timeframe. Look for consistent performance across different market conditions, reasonable win rates, and positive risk-adjusted returns. If it's not working, consider adjusting the parameters or using it as a filter rather than a primary signal.

Q: What's the biggest mistake traders make with this indicator? A: Chasing momentum too late in a color sequence. The best entries happen early in a new color phase, not after several bars of the same color. Wait for fresh color changes after neutral periods rather than jumping on established trends.

Final Thoughts on the Elder Impulse System

The Elder Impulse System transforms momentum analysis from a complex multi-indicator puzzle into a simple, visual traffic light system. By combining MACD and EMA signals into color-coded bars, it instantly shows you when bulls or bears are in control—and when the market is stuck in neutral.

Key Takeaways

• Green bars = bullish momentum (both trend and momentum rising)
• Red bars = bearish momentum (both trend and momentum falling)
• Blue bars = mixed signals (proceed with caution)
• Perfect for: swing and position traders who want clear momentum confirmation
• Caution needed: during choppy markets with rapid color changes

Getting Started Right

• Begin with the standard settings (12,26,9 MACD, 13 EMA) and only adjust if you see consistent issues
• Test across multiple timeframes—use daily charts for overall bias, then 1-hour or 4-hour for precise timing
• Avoid trading during rapid color switching periods (add a trend filter if needed)
• Consider partial profit-taking on the first neutral bar, then exit completely when the opposite color appears

For traders looking to explore related momentum tools, the Impulse MACD offers another perspective on momentum analysis. And remember—no indicator works in isolation, so always validate your strategies through proper backtesting before risking real money.