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Wednesday, July 30, 2014

"Impulse" study with Renko Bars

Okay, I'm still not yet in the groove of this Renko bar test on futures. I didn't like the 2-bar entry rule, as often the chart does an abrubt turn around after two bars. Sort of the modus when it goes into consolidation, 2 red, 2 green, 2 red, etc. But to wait for three bars seems to put me too late. Of course my other indicators help, but the Renko bothered me. Just a little TOO simple.

I pondered this, and remembered an indicator I put on my candle charts called "Impulse." I didn't know if it would work with Renko or not, but figured I'd give it a try. THAT way, a "blue" bar would not be "counted" in my 2-bar trigger.

This from Think or Swim:

The Impulse study is a bar coloring system based on two indicators: EMA and MACD Histogram; for MACD Histogram, values (12, 26, 9) are used as input parameters. A bar is painted green if both MACD and EMA values are higher than those of the previous bar. A bar is painted red if both MACD and EMA values are lower than those of the previous bar. A bar is painted blue if neither of the two conditions is fulfilled.

Green and red sections of the colored plot can be considered bullish and bearish segments of the indicator, respectively; blue sections are deemed neutral. A Buy signal occurs when the price is in long-term uptrend (usage of 65 period EMA for detection is suggested), and the Impulse turns bullish on the intermediate trend. The Sell signal is suggested when the price is in long-term downtrend, and the Impulse turns bearish on intermediate trend.


So how does it look?



As you can see, it informs the trader with a little more information, when data is not strictly bear or bull, but a shade of blue!

It's not the end-all, be-all information, as you can see, sometimes it doesn't help. But I like that it gives a pause sometimes when it's needed.

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