Fractal is an interesting indicator that is very popular among new traders.
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Why wouldn’t it, after all this fractal indicator tries to show the important price levels on a Trading Chart. This indicator is created by Bill Williams. That’s right. The same person who also created the famous alligator indicator. When I tested the alligator indicator 100 times in my previous video, to show it’s real win rate, we saw it was a good indicator that made money in the end. So lets see if fractal trading strategy is good as well.
On Trading View, this is what the Fractal Indicator looks like. Once you add it on your chart, you will see some arrow above and below the candles. On most trading platforms, These arrows are usually red and green in color. Green Arrows will only appear above the candle, and red arrows will only appear below the candles. Also, the arrow that form below the candles, are always pointing in the downward direction, and arrow that form above the candles, are always pointing in the upwards direction.
According to the fractal indicator, When a red arrow appears below the candle, the candle and low that the candle has created, can be an important price level. In simple words, the low of the candle could be a potential support.
Similarly, when a green arrow appears above the candles, the candle and the high that the candle has created, can be an important level. In simple words, high of the candle could be a potential resistance.
But, why are only some of the levels are considered important by the fractal indicator? Why the arrow doesn’t appear above other candles. Well, to answer that question, we will first have to understand how fractal indicator works.
The green fractal arrow will only appear, when there are two candles with a lower high on each side of it.
Here’s an example. Here you can see, the green arrow appeared, when the two candles on each side of it, had a lower high.
Similarly, the red fractal arrow will only appear, when there are two candles with a higher low on each side of it. Here’s an example. Here you can see, the red arrow appeared, when the two candles on each side of it, had a higher low.
First of all, lets see the basic Fractal Trading Strategy, then I will show you a way to filter false signals given by the fractal indicator, by using another indicator that is also created by Bill Williams.
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