The MACD is used to find divergences, which can indicate trend reversals. A bullish divergence happens when the MACD line goes up while the price goes down. The upward momentum is increasing, even if the price is not, which may indicate a trend reversal. A bearish divergence happens when the MACD line has lower lows, and the price has higher lows. The downward momentum increasing without a price change could signal a trend reversal.
Introduction to Impulse MACD as a modification
The Impulse MACD is a modified version of the traditional MACD indicator. It was developed by the popular TradingView scripter LazyBear in 2015. The Impulse MACD improves the traditional MACD by reducing false signals in range.
The Impulse MACD is calculated differently than the traditional MACD. It uses a filter to eliminate values, reducing whipsaws in sideways markets. The Impulse MACD plots a histogram to aid traders in identifying entries and exits.
Historical development of the Impulse MACD
The Impulse MACD was developed by LazyBear in 2015. He was inspired by Alexander Elder, who created the Impulse System for trading. LazyBear wanted to create an indicator to spot Impulse System signals easily. He tried modifying the MACD indicator and developed the Impulse MACD.
The Impulse MACD is popular for accurate signals in various markets. It’s widely used on TradingView by traders worldwide, making it highly popular.
Understanding Impulse MACD Indicator
In-depth explanation of the Impulse MACD formula
The Impulse MACD is calculated using the following formula:
Impulse MACD = (MACD – Signal) * (Moving Average Range / 100)
Where:
- MACD stands for Moving Average Convergence Divergence.
- Signal refers to the signal line.
- The moving Average Range represents the moving average range.
The MACD is determined by removing the sign line from the MACD line. The sign line is a 9-period outstanding moving normal (EMA) of the MACD line. The MACD line is determined by deducting a 26-period EMA from a 12-period EMA.
The Moving Typical Reach (Blemish) is a proportion of the instability of a market. Work out by deducting the least low from the most elevated high in a given time span. The MAR filters values in a range, reducing whipsaws in sideways markets.
The importance of signal line crossovers
Signal line crossovers are vital signals from Impulse MACD. A buy signal is generated when the Impulse MACD line goes above the signal. When it goes below the signal line, a sell signal is generated.
Signal line crossovers are particularly important in trending markets. When a trend is strong, the Impulse MACD line will typically stay above the signal line. When the trend weakens, the Impulse MACD line may cross below the signal line. This could indicate a trend reversal.
Role of histogram bars
Impulse MACD .histogram shows the difference between the MACD and signal lines. The histogram bars confirm signal line crossovers and show trend strength. Impulse MACD bars increase, suggesting a strong trend and a valid buy signal. When the Impulse MACD histogram bars go down, the trend weakens, and it’s a valid sell signal.
How to Use Impulse MACD Indicator for Trading
Step-by-step guide on interpreting Impulse MACD signals
To interpret Impulse MACD signals, traders should look for the following:
Signal line crossovers create buy signals when the Impulse MACD line crosses above. When the Impulse MACD line crosses below the signal line, it generates a sell signal.
Histogram bars are used to confirm signal line crossovers and measure trend strength. Positive and increasing histogram bars confirm a strong trend and valid buy signal. Negative, decreasing histogram bars imply a weakening trend and a valid sell signal.
Divergences can be used to detect possible trends that could be reversed. A bullish divergence happens when the Impulse MACD line goes up and the price goes down. A bearish divergence happens when the Impulse MACD line is lower while the price is higher.
Identifying bullish and bearish signals
Identify bullish and bearish Impulse MACD signals by looking for the following:
Bullish signals:
It is where the Impulse MACD line is over the line of signal. The Impulse MACD histogram bars are positive and increasing. There is a bullish divergence between the Impulse MACD line and the price.
Bearish signals:
It is where the Impulse MACD line runs beneath the line of signal. The MACD histogram bars are negative and decreasing. There is a bearish divergence between the Impulse MACD line and the price.
Setting up Impulse MACD on popular trading platforms
Impulse MACD is on TradingView, MetaTrader 4, and MetaTrader 5 platforms.
To set up the Impulse MACD indicator on TradingView, follow these steps:
- Log in to TradingView. with your TradingView account.
- Search for the “Impulse MACD” indicator in the Pine Editor.
- To add the Impulse MACD indicator to your chart, click the “Add Indicator” button.
- Configure the Impulse MACD indicator settings to your liking.
- Click the “Done” button to finish setting up the Impulse MACD indicator.
To set up the Impulse MACD indicator on MetaTrader 4 and MetaTrader 5, follow these steps:
Download the Impulse MACD Trading indicator .zip archive at the bottom of this post, unpack it, then copy and paste the forex indicators files of the Impulse MACD into the MQL4/MQL5 folder of the MetaTrader 4/MetaTrader 5 trading platform.
You can open this folder by clicking the menu options, which goes as follows:
File > Open mql Data Folder > MQL4 /MQL5> Indicators.
Impulse MACD vs Traditional MACD
Comparing Impulse MACD with the original MACD
The Impulse MACD is a modified version of the traditional MACD indicator. It uses a filter to remove certain values, reducing risks in sideways markets. The Impulse MACD plots the histogram (MACD – Signal) for traders to identify entries and exits.
The traditional MACD is a well-known indicator of momentum. However, it may produce false signals in ranging markets. The Impulse MACD filters values in a range to overcome this limitation.
Advantages and disadvantages of Impulse MACD
The Impulse MACD has many advantages over the traditional MACD, including:
It is less prone to generating false signals in the ranging markets. It is easier to identify signal line crossovers and divergences. It provides a more accurate gauge of the strength of the trend.
However, the Impulse MACD also has some disadvantages:
It is a more complex indicator than the traditional. Using MACD might require learning and practice. Backtesting is important with Impulse MACD historical data before using it in live trading.
Impulse MACD Indicator Signals
The Impulse MACD indicator gives signals for traders to find trading chances. Some of the most common Impulse MACD signals include:
- Signal line crossovers: When the Impulse MACD line crosses above the signal line, it generates a buy signal. When the Impulse MACD line crosses below the signal line, it generates a sell signal.
- Histogram bars: The Impulse MACD histogram bars can be used to confirm signal line crossovers and gauge the trend’s strength. When the histogram bars are positive and increasing, it suggests that the trend is strong and that the buy signal is valid. When the histogram bars are negative and decreasing, The trend weakens, and the sell signal is valid with divergence, which can be used to identify potential trend reversals. A bullish divergence occurs when the Impulse MACD line makes higher highs while the price makes lower highs. A bearish divergence occurs when the Impulse MACD line makes lower lows while the price makes higher lows.
Signal confirmation techniques
No technical indicator is perfect, including the Impulse MACD. Confirm its signals by using other forms of analysis before trading.
Here are a few signal confirmation techniques that traders can use:
- Price action: Traders should look for price action to confirm Impulse MACD signals. For example, if the Impulse MACD line crosses above the signal line, traders should look for the price to break above a resistance level before entering a long trade.
- Support and resistance levels: Traders can use support and resistance levels to confirm Impulse MACD signals. For example, if the Impulse MACD line crosses above the signal line, traders can enter a long trade at the next support level.
- Other technical indicators: Traders can also use other technical indicators to confirm Impulse MACD signals. For example, traders can use the moving average convergence divergence (MACD) indicator to confirm Impulse MACD signals.
Avoiding false signals
There are a few things that traders can do to avoid false Impulse MACD signals:
- Use other forms of technical analysis: Traders should use other forms of technical analysis, such as price action and support and resistance levels, to confirm Impulse MACD signals.
- Use a stop loss: Traders should always use a stop loss when entering a trade. This will help to limit losses; use a stop loss if the trade goes against you.
Also, backtest the Impulse MACD to ensure accurate signals and historical data before using it in live trading. This will help to identify any false signals that the indicator may generate.
Impulse MACD Indicator Free Download
Conclusion
The Impulse MACD is a potent tool for traders to spot market opportunities. Use other analysis and risk techniques to avoid false signals and limit losses.
