To the inexperienced trader, the financial markets seem to move randomly. In contrary, a compleat trader can see the order amongst the randomness. Whether or not it is conscious, this is accomplished using Forex Fractals analysis. Fractals are phenomena that occur in nature. They are self- replicating patterns of non-linear objects, such as clouds, river flow, and leaves. Forex Fractals patterns occur on price charts as well, and by using Forex Fractals analysis you will be able to see order amongst the randomness.
Fractals exist on every timeframe, from ticks to yearly data. Low risk, high probability trades frequently occur if Forex Fractals analysis is properly done. For instance, a great shorting opportunity may result when a Fibonacci retracement level is tested and a Fractal forms. Also, a great buying opportunity may occur when resistance is broken and there is a retest of previous highs. These resistance areas were fractals too. Also, you may be looking to buy after a fractal forms on new support. Remember, resistance turns to support. These patterns frequently occur, and it is to your advantage to learn its significance.
How We Use and Define Forex Fractals
We use fractals to define highs and lows. Forex Fractals consist of a series of five minimum bars. Bill Williams advises beginning traders to imagine your hand as a fractal. Your middle finger is the defining structure of a Forex Fractal. You have two fingers to the left and two fingers to the right. If you place your palm outward, this is an up fractal. Your two fingers to the left of your middle finger have lower highs relative to your middle finger. Conversely, your two fingers to the right of your middle finger have two lower highs relative to your middle finger. This is what an up Forex Fractals looks like on a price chart. Two lower highs on both side of the fractal. Video 1 clearly elucidates this structure.
On the contrary, if you place your palm inward and point to the floor, this is a down fractal. Again, your middle finger is the defining structure of the Forex Fractals. You have two fingers to the left and two fingers to the right. Your two fingers to the left of your middle finger have higher lows relative to your middle finger. Conversely, your two fingers to the right of your middle finger have two higher lows relative to your middle finger. This is what a down fractal looks like on a price chart. Two higher lows on both side of the Forex Fractals. Video 1 clearly elucidates this structure as well.
In video 2, we go through a price chart to apply the theory to practice. You will see how everything blends together. Forex Fractals are the defining structure of highs and lows. The highs and lows are the defining structure of price waves. Support and resistance naturally occur after a convergence of the fractals. Everything is connected. It is like a work of art.