We will use this value in the future to place a take profit order. In the above example, the state of the "sleeping Alligator" lasts for approximately 35 hours, that is, 35 one-hour candles.
How to trade using fractals
Next, finding the "sleeping Alligator" on the chart, we turn to the values of the Fractals indicator. Here you need to find and mark the levels of the last two suitable fractals in the sleeping Alligator zone.
Suitable are those fractals whose candles and candle tails do not touch the alligator lines. The horizontal levels of these fractals are the levels of opening a position. In the above example, buy stop order is triggered first at the level of 1. Take Profit is set at 1.
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A fractal down or a signal for position to sell is the reverse pattern made up by five or more consecutive candles, the average from which shows the lowest minimum. The aim of such analysis is «to notice» in time and correctly to treat fractal designs in conjunction with other market data regardless of whether they are fundamental and technical, volume and temporary.
The set of the real fractals is very dynamic. It can vary depending on quantity and structure. The main thing is that one of the central bars has to show an obvious extreme.
Fractal Definition | Forexpedia by
Therefore, non-standard combinations can also be used as fractals:. If the extremes have appeared at several bars of a pattern, then only the last will be taken into account as a trading signal. Current price movement 1 point higher the level of the fractal up is the breakthrough of the sellers, while if it is 1 point below the fractal down, it is a breakthrough of the buyers. The approximate scheme of an entry is shown below.
Fractal Indicator Helps Identify Market Turning Points
The strongest signal is just after its emergence, and the same group of candles can be used both for upper and for the lower fractals. Pointers of the appeared fractals are not redrawn. The border of the upper fractal is the maximum, while the border of the lower is the minimum.
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In case of formation of an opposite fractal, the current trading signal is cancelled. The emergence of two multidirectional fractals close to each other sometimes in one candle is called a fractal start: further the market is assumed to make the decision for the benefit of one of the directions. The true breakdown of a fractal on any timeframe shall be confirmed by certain volumes.
A firm breakthrough candle but with the small volume appears to be an unstable signal.
Alligator & Fractals Fx Trading Strategy – A Highly Practical Way For Finding And Executing Trades
Also for an assessment of volumes it is recommended to use standard designs of Price Action. Nowadays nobody looks for the trading fractals on a price chart manually. For these purposes a standard package of any trade platform includes the Fractals indicator. We will offer two popular trading strategies on its basis. Regular Fractals and Alligator indicators with standard settings are necessary for using this strategy.
We trade all major currency and future assets: for the analysis and an entrance - M15, for maintenance — from H1 above for futures - from D1 above.
Detecting patterns in price movements - Fractals for beginners
The entry scheme for fractals Forex trading is shown below. Stop losses are on an opposite extreme from 2 last fractals: purchase is below the lowest, sale is slightly higher than the highest. We hold the transaction until the return fractal has been formed.
In a flat we ignore all fractals. The period for the analysis and entry is D1. Stops and profits are usually not put, at the end they are closed manually. If there is a fractal up it is a sale, in case of the lower fractal there is a purchase.