How Does the Fractals Indicator Work: Description, Settings
Author: Andrey Goilov
Dear Traders,
The Fractals indicator was designed and popularized by Bill Williams, the author of one of the most popular trading systems and the book "Trading Chaos". This instrument is a technical indicator that allows to detect local extremums on the chart. A breakout of these levels may provoke a good future move in their direction. The author recommends using Fractals with the Alligator indicator; however, there are methods of trading with Fractals that are far from the classical author's ideas.
Description of Fractals
For the indicator, we use five candlesticks, the third candlestick in the combination should have the highest high or the lowest low. If there is such a formation on the chart, the indicator shows narrow either above the candlestick or below it.
For example, if we are speaking about an ascending fractal, to define it, we need to see on the chart a minimum of five candlesticks following one another, with a lower candlestick at each side of the highest one. Conversely, for a descending fractal, here it is important to see a minimum that will be among four other candlesticks with higher minimums.
The author notes that for a fractal, we do not need five candlesticks exactly, there might be less. However, the five-candlestick combination has become most popular in modern trading.
One of the important advantages of the indicator is the possibility to mark important support and resistance levels. Many traders just add Fractals to the chart and work with breakouts of the levels or try to combine it with graphic patterns.
Read more at R Blog - RoboForex
Sincerely,
RoboForex team
Author: Andrey Goilov
Dear Traders,
The Fractals indicator was designed and popularized by Bill Williams, the author of one of the most popular trading systems and the book "Trading Chaos". This instrument is a technical indicator that allows to detect local extremums on the chart. A breakout of these levels may provoke a good future move in their direction. The author recommends using Fractals with the Alligator indicator; however, there are methods of trading with Fractals that are far from the classical author's ideas.
Description of Fractals
For the indicator, we use five candlesticks, the third candlestick in the combination should have the highest high or the lowest low. If there is such a formation on the chart, the indicator shows narrow either above the candlestick or below it.
For example, if we are speaking about an ascending fractal, to define it, we need to see on the chart a minimum of five candlesticks following one another, with a lower candlestick at each side of the highest one. Conversely, for a descending fractal, here it is important to see a minimum that will be among four other candlesticks with higher minimums.
The author notes that for a fractal, we do not need five candlesticks exactly, there might be less. However, the five-candlestick combination has become most popular in modern trading.
One of the important advantages of the indicator is the possibility to mark important support and resistance levels. Many traders just add Fractals to the chart and work with breakouts of the levels or try to combine it with graphic patterns.
Read more at R Blog - RoboForex
Sincerely,
RoboForex team