Guide to Timing Entries With the Elder Impulse System

By ATGL

Updated February 1, 2026

Table of Contents

The Elder Impulse System provides traders with a visual framework for timing entries by combining trend direction with momentum strength. Developed by Dr. Alexander Elder, this color-coded method distinguishes between strong directional movement and weak price action. By synthesizing both components into intuitive signals, the system offers a structured approach to chart analysis that reduces guesswork and accelerates decision-making.

What Is the Elder Impulse System?

The Elder Impulse System is a technical analysis tool that evaluates market conditions by measuring two fundamental dimensions: trend (inertia) and momentum (power). This dual-component approach distinguishes it from single-metric indicators that may generate premature or contradictory signals during transitional market phases.

Origin and Purpose of This Color-Coded Entry Tool

Dr. Alexander Elder designed this system to identify when trend and momentum align. The system measures trend inertia through a 13-period exponential moving average slope and momentum power via the MACD indicator histogram slope.

Color coding translates these calculations into signals. Green bars indicate both components rising (bullish impulse). Red bars show both declining (bearish pressure). Blue bars appear when trend and momentum disagree, signaling potential transitions or consolidation.

Core Components: Trend and Momentum

The effectiveness of the Elder Impulse System stems from its integration of two complementary technical elements that together provide a more complete picture of market conditions than either could offer independently.

How EMA and MACD Histogram Work Together

The 13-period exponential moving average identifies trend direction, responding quickly to recent price changes. The MACD histogram adds momentum analysis by measuring the slope of the difference between the MACD line and signal line. A rising histogram slope indicates accelerating bullish momentum, while a declining slope suggests weakening or bearish pressure.

When both components align — rising EMA with rising MACD histogram — conditions favor long positions. When both decline, short positions become more compelling. This dual confirmation requirement filters premature signals that affect single-indicator systems.

How the Color Signals Work

The visual simplicity of the Elder Impulse System’s color coding masks the sophisticated analysis occurring beneath the surface. Each color represents a specific relationship between trend and momentum that carries practical implications for trade timing.

Green, Red, and Blue Bars Explained

Green bars above the exponential moving average suggest buying opportunities when both trend and momentum confirm bullish conditions. Traders use these signals to initiate long positions or add to existing ones.

Red bars below the EMA indicate selling opportunities or exit points. When both components decline, the probability of continued downward movement increases substantially.

Blue bars signal disagreement between trend and momentum, typically during consolidation or transitions. Rather than providing clear entry signals, blue bars suggest caution and help traders avoid premature entries during false breakouts.

The system gains power when combined with longer-term moving averages, such as a 26-period EMA, or integrated into Alexander Elder’s Triple Screen System.

When To Enter and Exit Trades

Translating the Elder Impulse System’s signals into actual positions requires understanding what the colors mean and when they provide the most reliable guidance for market timing decisions.

Using Impulse Signals to Confirm Market Timing

Entry timing improves when traders wait for color changes, confirming momentum shifts. Transitions from blue to green provide lower-risk entry points than chasing established green phases. Shifts from blue to red signal optimal short entry timing.

Position exits benefit from early warnings. When green bars transition to blue, momentum lags even as the trend remains intact. This divergence often precedes reversals, allowing traders to secure profits before markets shift to red.

Avoiding Fake Signals: How the System Filters Out Consolidation and Noise

The dual-component requirement filters false signals during sideways markets. In consolidation phases, the Elder Impulse System displays blue bars, indicating conditions don’t support high-conviction entries.

This mechanism proves valuable in range-bound markets where single indicators generate conflicting signals. By requiring agreement between trend and momentum, the system reduces entering positions during choppy price action lacking follow-through potential.

Elder Impulse System Indicator

Most modern trading platforms offer the Elder Impulse System as a built-in indicator or allow traders to construct it using the platform’s EMA and MACD tools.

Filtering Out Consolidation and Noise

The system excludes low-probability setups by requiring trend and momentum agreement. During volatile periods with unsustainable direction, blue bars keep traders out of positions that require immediate exit.

Combining the Elder Impulse System with volume confirmation strengthens reliability. Rising volume during green bars confirms broad participation, while declining volume warns of weak conviction. Pairing with support and resistance levels identifies whether momentum shifts occur at significant price points.

Elder Impulse System PDF Reports

Many traders document their Elder Impulse System strategies in reference guides that detail specific entry rules, position sizing approaches, and timeframe considerations. These resources often include visual examples showing how different market conditions produce different color patterns and how to distinguish between high-quality and marginal signals.

Is the Elder Impulse System Right for You?

While the Elder Impulse System provides valuable insights for many trading approaches, its effectiveness varies depending on market conditions and individual trading styles.

Best Use Cases and Trading Styles It Supports

Day traders and swing traders benefit from the system’s effectiveness on shorter timeframes, where quick momentum identification provides actionable advantages. Visual clarity enables rapid assessment of multiple securities simultaneously.

Trend-following strategies benefit from confirmation of accelerating versus weakening trends. Position traders can time entries at the beginning of strong moves rather than after substantial movement has occurred.

When to Avoid Using the Elder Impulse System

Choppy, range-bound markets present the primary limitation. During extended consolidation, the system generates conservative signals that protect capital from whipsaw losses but may cause traders to miss range breakouts without confirmation from other methods.

Low-volatility markets produce frequent blue bars, offering limited guidance. You may need to supplement with additional tools that excel in sideways conditions, such as oscillators for overbought and oversold levels.

Explore Above the Green Line’s membership options to access advanced technical analysis resources using systematic approaches like the Elder Impulse System.