Hypercomplex fractals forex

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Fractals essentially break down larger trends into extremely simple and predictable reversal patterns. When many people think of fractals in the mathematical sense, they think of chaos theory and abstract mathematics. While these concepts do apply to the market most traders refer to fractals in a more literal sense.

That is, as recurring patterns that can predict reversals among larger more chaotic price movements. These basic fractals are composed of five or more bars. The rules for identifying fractals are bearish turning point occurs when there is a pattern with the highest high in the middle and two lower highs on each side, a bullish turning point occurs when there is a pattern with the lowest low in the middle and two higher lows on each side.

Fractal trading is only one of the evaluation methods which is effective during the periods of a stable trend, while in a wide flat can be unprofitable. It is necessary to understand that the fractals trade strategies were initially developed for the stock market which was less volatile and more predicted.

The combinations of fractals have such characteristics as self-similarity, scaling and memory of the entry conditions and therefore, they can be used successfully for making price forecasts. Fractals are indicators on candlestick charts that identify reversal points in the market. Drawing trend lines using fractals could give some advantage to Forex traders since other market participants might also be using the same obvious price points for drawing trend lines.

Fractals as trend confirmation In an uptrend we will witness that there are more up fractals broken than down fractals. In a downtrend there will be more down fractals broken. As trend up or down progresses a successive break and advance of new fractals will be seen. Should the break of the previous fractal fail, we get a first sign of price consolidation. Fractals for trend consolidation Failure to successfully advance past previous fractal puts price on a consolidation path.

To avoid an immediate coiling price will attempt to break at the opposite fractal. Should this move also fail to bring results, traders should prepare for a ranging market period till a new successful breakout. According to his system, Fractals have to be filtered with the help of Alligator indicator. Main rule above all rules when following Bill Williams' method: don't take any signals from other indicators Gator indicator , Awesome Oscillator , MFI etc until the first fractal buy or sell is formed outside the Alligator's teeth.