Let’s take a look at the Forex price movement impulse indicator called the Forex Impulse Indicator. It generates the signals based on the reading of the classic MACD indicator. This tool is also designed to send the more smoothed signals to a trader, which enables to enter the market more accurately.
Before reading the article and writing your questions in the comments section, I recommend to watch this video. It’s not long but covers the biggest part of questions on the topic.
If we talk about any financial asset, we can say that sits movement is the constantly changing of sideways consolidations and surges. However, the flat movement is of little interest to the traders. What the traders do care about is the timelines, which contain the price surges that often keep going towards a breakout (a surge). You surely can make good money out of it!
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The traders call the price surges the impulses
The term the impulse can also be described as a sharp price movement followed by a large volume. The impulse can also cause breakouts of the key levels and their retest in the future. Several long Japanese candlesticks can handle the impulse price movements formed because of the large volume. Usually such Japanese candlesticks have no large shadows or the shadows are insignificant and not exceeding 20% of the candlestick body’s entire length. In most cases, the impulse candlesticks become a signal to enter the market as they often continue to move towards a price surge. The Forex impulse levels are often followed by the price retests. After they are finished, you may think about entering the market.
There are many impulse-based trading strategies and most of them are short-term since an impulse occurs within a day and barely affects the global trend. The Price Surges usually appear at the flat or sideways price movements on the Forex market.
The Forex Impulse Indicator is designed for these purposes. This is a two-color histogram at the bottom of the chart. You can apply this tool not only to the short-term markets but also to the longer timeframes.
How to work with the Forex Impulse Indicator
The Forex Impulse Indicator is the trend indicator and it will help you to find a moment of the trend change. How? Well, it is quite simple. The indicator will change the color of the histogram when it happens.
For instance, you need to wait until the histogram changes its color from red to blue to buy. It is a signal for you about the retracement or the trend switch. When the histogram changes its color from blue to red, you should think about selling. The market uptrend will switch to the downtrend.
How to Buy and Sell basing on the Forex Impulse Indicator
That’s how buying looks like. We see that the impulse level indicator has changed its color from red to blue. Wait till the bars of the histogram change their color from blue to red if you want to sell. You can see such a change on the screenshot below:
Taking Advantage of Support and Resistance Levels
We should remind you once again that there is no Forex Indicator able to guarantee a perfect entry to the market. By the way, the Forex Impulse Indicator cannot do that as well. It becomes extremely efficient when used in conjunction with other tools. For example, it works well with the support and resistance levels indicator. It is of no surprise because the price moves from one level to another. The liquidity often accumulates in these areas and this is where a trend may change its direction.
The idea of the Forex Impulse Indicator is to show you the trend change. Therefore, it is relevant only for the areas where the price direction may change.
Proper Use of Support and Resistance Levels
You should create the levels properly to work with them. Remember that the level’s strength depends on the amount of times the price bounced from it. We do recommend you to build the levels on the one-hour timeframe.
We should note that the Forex Impulse Indicator involves working with two main levels. You won’t need to create any other levels.
Trading upon Impulses: an Example of the Market Entry for Selling
Remember, you must look for the market entry on the M15 timeframe after you have created the key levels on the H1 timeframe.
The conditions for entering the market for selling:
- Wait until the price goes into the resistance area before expecting the Forex Impulse Indicator to give a signal to enter the market. We have marked it with the red line on the screenshot above.
- The Impulse Level Indicator changes its color from blue to red after that.
- Open a transaction when the first Japanese candlestick closes in the red zone.
- Set a stop-loss order after the closest local maxima.
You can see how the market entry points are forming on the screenshot below:
Now we can see the Impulse Level Indicator changing its color to red.
When the candlestick goes into the red zone, you can enter the market. Number one stands for the market entry and number two is a Stop-Loss Order.
Example of the Market Entry for Buying
Open the order on the M15 timeframe the same as we have done in case of selling.
The conditions for buying are the following:
- Wait until the price goes into the support area.
- The Forex Impulse Indicator must display a blue bar.
- Enter the market when the first candlestick in the blue zone is closed.
- Set a Stop-Loss Order after the first local minima.
Below you can see an example of the price going into the support area. It is marked with the blue horizontal line on the screenshot.
Watch how the Impulse Level Indicator changes its color.
Point #1 stands for the market entry point after the closing of the candlestick. Point #2 is the Stop-Loss Order.
I think now you have learned how the Forex Impulse Indicators perform. This tool has a great advantage as it is quite simple to use and tied to the MACD Indicator. We have also discussed the ways of using the Forex Impulse Levels in conjunction with the Forex Impulse Indicator and provided the selling and buying examples upon this indicator.