Overview of the Impulse Master Indicator
I. Topping Process. Five Steps to Confirm a Bearish Reversal
Step 1. Down Completion Label (90% or 100%)
First, the indicator prints a red “UP 90%” or “UP 100%” completion label, signaling that the preceding bullish impulsive (trending) move up is likely exhausted.
This is the earliest sign that rally may be running out of steam.
Step 2. Red Box ("Supply Zone") is Drawn
Next, a red Supply Zone (red rectangle) appears, highlighting an important resistance area where selling pressure is expected to intensify. The indicator expects that selling pressure to stop the rally and possibly reverse the uptrend down.
Step 3. "Turn Down" red label
The Turn Down signal (highlighted, for example, with a red bright vertical line) is your first clear indication that momentum may be shifting from bullish to bearish.
Note: The combination of Steps 1, 2, and 3 of the Topping Process merely provides preliminary evidence of a possible bearish reversal. We still need confirmation that sellers truly got the upper hand.
Step 4. Break under trailing support
Every new move down have two tests. First, bears test support of the green trend channel. Second, bears need to test and possibly break under support of the green stair step line, the trailing support.
When bears managed to violate the green stair step support, a red trailing resistance emerges.
Step 5. "Short re-test" red label
A textbook breakdown-followed-by-retest pattern is familiar to most traders. This indicator simplifies the process of identifying this bearish reversal setup. Often, after bears break below the support level of the green trailing setup, bulls quickly step in to attempt to rescue the uptrend. This creates a pivotal moment as bulls test the strength of the newly established downtrend. As prices push back up, they typically encounter resistance at the red trend channel. If the indicator detects signs of hesitation or weakness at this resistance level, it highlights the opportunity by displaying a red label: ‘Short Re-test.’
On the chart below you can see that failure of bulls to break over the downward sloped red Trend Channel attracted more short sellers. Once price made a lower high under the downwards sloped Red Channel what followed next was an accelerated trending move down.
