You short a pair because momentum finally rolled over, the histogram ticked down, and the setup looked clean. Two candles later price is back above where you sold, the trend never actually broke, and you are stopped out on a bounce you should never have traded. The momentum tool was right about the pullback and wrong about the trade, because it only ever told you half the story.
That half-story problem is the exact thing Dr. Alexander Elder set out to solve when he built the Impulse System. It stops treating trend and momentum as two separate screens and paints both onto every candle, so a single glance tells you which direction you are even allowed to trade.
By the end of this guide you will read the green, red, and blue bars, understand the permission rule behind them, and run the one reload test that separates a clean impulse tool from a repainting copy.
Key Findings
- Two engines, one color: a green bar means a 13-period EMA and the MACD histogram both point up, red means both point down, blue means they disagree.
- It is a brake, not a trigger: the system was designed to forbid trades, not open them, so it keeps you off the wrong side of a move.
- Blue is the honest signal: a blue bar flags the moment momentum stops agreeing with the trend, which is where most fake reversals hide.
- The core colors do not repaint: once a candle closes its color is fixed, but bolted-on arrow versions can redraw, so verify before you trust.
What is the Elder Impulse System indicator?
The Elder Impulse System is a candle-coloring tool that answers two questions at once and folds the answer into the color of each bar. The first question is about trend: is a 13-period exponential moving average, a fast average of recent closes, currently rising or falling? The second is about momentum: is the MACD histogram, which measures how quickly two moving averages are pulling apart, rising or falling?
When both answers are up, the candle turns green. When both are down, it turns red. When one says up and the other says down, the candle turns blue. That is the whole engine. Elder introduced it in his 2002 book Come Into My Trading Room, and the idea was deliberately strict: he wanted a tool that would tell a trader when to sit on their hands.
Most indicators add a signal. This one takes signals away.
How do you read the green, red, and blue bars?
Read the colors as permissions, not as buy and sell arrows. Each color grants some actions and forbids others, and the forbidden side is usually the more valuable half.
A green bar says buyers hold both the trend and the momentum. You are allowed to be long or flat, and you are not allowed to short. A red bar says sellers hold both, so you may be short or flat, never long. A blue bar means the two engines disagree; the trend leans one way while momentum has turned the other, and the system lifts its restriction in both directions.
Here is the combination laid out plainly.
| 13-period EMA | MACD histogram | Bar color | What you may do |
|---|---|---|---|
| Rising | Rising | Green | Buy or stand aside, not short |
| Falling | Falling | Red | Sell or stand aside, not long |
| Rising | Falling | Blue | Either direction, or wait |
| Falling | Rising | Blue | Either direction, or wait |
Notice that the blue bar covers two different situations that both mean the same thing to a trader: agreement has broken. That is the tool’s quiet strength. It does not pretend a stalling trend is a fresh reversal.
What settings does the Elder Impulse System use?
The default is a 13-period exponential moving average for the trend and a standard MACD histogram, built from the 12, 26, and 9 period settings, for momentum. Both numbers come from Elder’s own design and most traders leave them alone.
The reason to leave them alone is that the system does not live or die on the exact length. It lives on whether the two engines agree. Shorten the EMA and colors flip faster, which floods the chart with blue bars and second-guesses every wobble. Lengthen it and a single color holds through more noise, which suits slower position trading but reacts late to a real turn.
If you do change a setting, change it on the market and timeframe you actually trade and watch how often the color now flips. A tool that changes color on every candle has stopped filtering anything.
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Get RelicusRoad ProDoes the Elder Impulse System repaint?
The core coloring does not repaint a closed candle. Both inputs read from finished prices, so the moment a bar closes its color is locked and it will look identical when you open the chart tomorrow. The only bar that moves is the one still forming, and a live candle changing color as price ticks is ordinary behavior, not repainting.
The real trap lives in the add-on versions. Plenty of “impulse” packages layer buy and sell arrows or entry dots on top of Elder’s colors, and some of those markers redraw their own history so a replay looks perfect. The colors stay honest; the bolted-on arrows are where a back-test quietly lies to you.
This is where the difference between a clean, locked read and a shifting one stops being academic. A color that is fixed at the candle’s close is the same color you saw when you made the decision. If you want the mechanics of that behavior in more depth, the walkthrough on a non-repaint forex indicator breaks down exactly what does and does not stay put.
How does it compare to the MACD histogram alone?
The MACD histogram on its own is a momentum reading and nothing more. It rises and falls with the acceleration of a moving-average spread, and it will happily tick up during a counter-trend bounce inside a clear downtrend. Traded straight, that up-tick is the exact bounce that stops you out.
The Impulse System wires a trend filter into that same histogram. A rising histogram inside a falling EMA does not paint a green bar; it paints blue, which reads as “momentum is arguing with the trend, so stand down” rather than “buy.” That single change is the difference between a momentum tool and a system that respects context. If you want the momentum engine on its own terms first, the MACD histogram strategy guide covers how the histogram behaves before a trend filter is added, and the Elder Ray Index shows a second Elder tool that measures pressure rather than permission.
An honest caveat: the Impulse System lags, because both of its engines are built from averages. It will not call a top or a bottom. What it does well is keep you from trading against a move that has both trend and momentum behind it, and for most retail accounts that discipline is worth more than an early entry.
Where RelicusRoad Pro fits
The value of a color-coded system is only as good as your trust that the color will not change after you have acted on it. That trust is the whole point of a non-repaint build. RelicusRoad Pro is built around signals that lock at the candle’s close and stay locked, so the read you take a trade on is the read that stays in your history. It is not a promise of profit and it will not fix loose risk; it removes the specific problem of a chart that rewrites itself, which is the one thing a permission system like Elder’s cannot afford.
Frequently asked questions
What is the Elder Impulse System indicator?
It is a bar-coloring tool designed by Dr. Alexander Elder and described in his 2002 book Come Into My Trading Room. It reads the direction of a 13-period exponential moving average for the trend and the direction of the MACD histogram for momentum, then colors each candle green when both point up, red when both point down, and blue when they disagree. The colors summarize trend and momentum in one glance rather than a separate line under the chart.
How do you read the green, red, and blue bars?
Read the colors as permissions, not commands. A green bar means buyers hold both trend and momentum, so you may be long or flat but not short. A red bar means sellers hold both, so you may be short or flat but not long. A blue bar means the EMA and the histogram disagree, momentum has stalled or turned, and the restriction lifts in both directions. The most useful signal is often the side you are forbidden to trade against.
What settings does the Elder Impulse System use?
The original design uses a 13-period exponential moving average and a standard MACD histogram built from the 12, 26, and 9 settings, and those remain the common defaults. The system depends on whether the two engines agree, not on fine-tuned numbers. A shorter EMA flips colors faster and prints more blue bars, while a longer EMA holds a color through more noise. Test any change on the market and timeframe you actually trade.
Does the Elder Impulse System repaint?
The core coloring does not repaint a closed candle, because both inputs are calculated from finished prices and lock the moment a bar closes. The live, unfinished bar changing color is normal and is not repainting. The genuine risk is third-party builds that add buy and sell arrows on top of the colors; some of those arrows redraw their own history. Mark a past arrow, reload the chart, and confirm it stayed put.
What is the difference between the Elder Impulse System and the MACD histogram alone?
The MACD histogram alone reports only momentum and will tick up during a counter-trend bounce. The Impulse System combines that histogram with the slope of a 13-period EMA, so a rising histogram inside a falling trend paints a blue bar rather than a false buy hint. It is the momentum histogram with a trend filter wired directly into the bar color.
Want a colored read that stays put after the candle closes? See how RelicusRoad Pro locks its signals, or get in touch with what you trade and we will point you to the right starting setup.