MACD strategy is one of the most widely used techniques among the traders. It’s very simple and effective strategy for identifying trends by showing crossovers between two lines. When the blue line crosses above the orange line, it signals an uptrend, suggesting a potential buying opportunity. If the blue line crosses below the orange line, it indicates a downtrend, signalling a selling opportunity.

The classic MACD works in trending markets but gives false signals in sideways markets. The Impulse MACD fixes this by filtering out false signals and helping you profit in range-bound markets.

What Is the Impulse MACD Strategy?

The Impulse MACD strategy is similar to the classic MACD, but with one key difference: it removes false signals during range-bound markets. While the original MACD lines cross frequently in sideways markets, the Impulse MACD indicator goes flat, indicating a lack of trend.

How to Set Up the Impulse MACD Indicator

To start using the Impulse MACD strategy, follow these simple steps:

  1. Open Trading View or your trading platform.
  2. Search for Impulse MACD in the indicators section.
  3. Choose the Impulse MACD indicator and apply it to your chart.
  4. Adjust the colors to make it easier to read.

The Impulse MACD consists of four components:

  • The blue line (Impulse MACD line).
  • The orange line (signal line).
  • The histogram.
  • The middle line (reference point).

How to Trade Using the Impulse MACD Strategy

The Impulse MACD strategy works by looking at the crossovers between the blue and orange lines:

  • When the blue line crosses above the orange line, it indicates upward momentum (buy signal).
  • When the blue line crosses below the orange line, it signals downward momentum (sell signal).

However, when both lines go flat, it indicates the market is range-bound, and you should avoid entering a trade. This is one of the strengths of the Impulse MACD strategy—it helps you stay out of weak trades.

Advanced Strategy: Trade Using the Impulse MACD Strategy

To further enhance your MACD strategy, you can use the Impulse MACD extension. This strategy involves setting overbought and oversold levels to filter out weaker signals. Here’s how you can apply it,

  1. Drag your mouse above the middle line of the indicator to create the overbought level.
  2. Create the oversold level below the middle line.

By applying these levels, you ensure you only take positions when the price is overextended, which can lead to higher potential moves.

How to Set Overbought and Oversold Levels

To determine the exact placement of overbought and oversold levels:

  1. Zoom out on the chart to see previous crossovers.
  2. Identify major crossovers that occur far from the middle line (these are more significant).
  3. Ignore minor crossovers that happen closer to the middle line.
  4. Draw a horizontal line to separate the major and minor crossovers.

Once you’ve identified the levels, place your overbought line above the major crossovers and the oversold line below the major crossovers. This helps refine your Impulse MACD strategy and avoid weak signals.

Executing Trades with the Impulse MACD Strategy

Now that you have your Impulse MACD strategy set up, here’s how to use it in real trades:

  • Buy Signal: When blue line crosses above the orange line and the crossover happens below the oversold line, it’s a strong buy signal.
  • Sell Signal: When blue line crosses below the orange line and the crossover happens above the overbought line, it’s a strong sell signal.

Avoid taking trades when the crossovers happen between the overbought and oversold lines. This is because such crossovers have a lower chance of leading to significant price moves.

Example

Let’s look at an example. We see a buy signal when the blue line crosses above the orange line and the crossover happens below the oversold line. This indicates upward momentum, making it a good buy opportunity.

Why the Impulse MACD Strategy Works?

The Impulse MACD strategy is an advanced method that builds on the classic MACD. It helps filter out false signals and focuses only on high-probability trades. By using the Impulse MACD extension with overbought and oversold levels, you can increase your chances of capturing significant price move.

This strategy is perfect for both trending and range-bound markets, giving you a reliable tool for consistent profits.

Stay tuned for more advanced trading strategies and tips.

Happy trading!

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