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Thursday, April 08, 2021

Fractals (Part 3 of 3/Definition & How To Use)

Fractals (Part 3 of 3/Definition & How To Use)


Fractals Definition:
A Fractal is a graphical figure of technical analysis which is usually used by traders to find the most appropriate entry and exit point on the market. To make more accurate decisions, a fractal is used mostly in conjunction with other indicators and methods of technical analysis since it is seen as a lagging indicator. A fractal is made up of five candles, the average of which indicates either the maximum or minimum price in the time period.

As a rule of thumb, about 75-80% of the time, the foreign exchange market is in a state of consolidation. Only 20% of the time the price moves significantly in what could be considered a trending direction. How to determine the limits of consolidation and moments when the price moves from consolidation stage to trend stage? The fractal indicator can help you with this – one of five unique technical indicators of Bill Williams , that are rightfully revolutionary in the field of online trading and technical analysis . A description related to the specifics of the operation of the Fractals indicator can be found within this article.
Fractal indicator determines for us nothing more than local low and high, breakdowns of which are usually associated with local changes in trends, and it works without repainting. The fractal signal about formation of a new local low or high on the chart is two candles late. Since, according to the calculation formula of this technical indicator, to determine the highest of the five candles, the indicator analyzes the mutual construction of the first two, mid, and the last two candles. If middle candle is higher than four candles in this row, the fractal indicator “draws” an up arrow above it. If the middle candle is lower than the other four, a down arrow appears under it. When the fractal arrow appears above or below the candles, it is most likely too late to enter these signals, since price may have already moved far away from optimal level to enter the market. fractal indicators to determine the possible direction of price.

How to use fractals in Forex
Fractal links of exchange prices and the repeating structures have been confirmed by the results of computer modeling. The fractal ( fr om Latin fractus) means a steady scalable design of irregular shape emerging on any data. The trade fractal in the financial market is the candle pattern formed by at least 5 (or more) candles, max/min of the central candle of which exceeds the extremes of the neighboring candles. Emergence of fractals means the beginning of a new price pyramid and is considered as a trading signal.
*Note: Look for trades with the five Forex energies aligned up with trade you want to take which are: trend, momentum, fractal , liquidity & volume .

from Trading Ideas
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