What are Fractals?
Fractals on Expert Option are patterns that keep on showing up on the trading charts. It comprises of 5-bar patterns indicating market trend reversals.
At first glance, you may be tempted to think that Fractal patterns are all about complex mathematics calculations.
Well, it is not.
Fractals are patterns that occur within the overall chaotic market you are used to every day. As the price moves, the patterns are revealed.
All you have to do is know what you are looking for. Once you have identified it, know what to do with it.
To paint a clear picture, here is what the Fractal patterns look like:
Adhere to these guidelines to pick trading signals effectively.
- A bullish reversal occurs when the pattern shows the lowest low in the middle and two higher lows on both sides.
- A bearish reversal occurs when the pattern is showing the highest high in the middle and two lower highs on both sides.
What you just read can be described as the perfect scenario of Fractals pattern. But make no mistake; Fractals do not always stick to this script.
Either way, this basic setup should be attained for the Fractal pattern to be validated.
Moving on, now that you have an idea of what Fractal patterns look like, the question is, what does it tell you?
What do patterns on fractal indicator tell you?
As you will see in the image below, the Fractal pattern consists of 5 candlesticks. Every time these patterns are formed on the trading chart, you will see an arrow drawn either below or above the center candle.
The arrow is located at the lowest or the highest candle within the pattern set up.
What is a Fractal high and what does it mean?
Fractal high is a candlestick set up consisting of two lower highs and one higher high in the middle.
The arrow we talked about is drawn on top of the higher high (the middle candle).
Whenever you see such a Fractal set up, it is an indication of a looming fall in the prices of the underlying asset.
Additionally, such a set up is commonly known as the bearish fractal pattern.
What is Fractal low and what does it mean?
This is the complete opposite of the fractal high pattern. In that, it occurs when there are two higher lows and one lower low in the middle.
As such, the lower low candlestick is marked.
The fractal low pattern is a signal of an impending uptrend. In other words, the prices are about to change course and move up.
With that in mind, you can already tell that studying and using the Fractal indicator is more of an observation than a complex task.
Search through your Expert Option trading chart for the low or high trading points and when you find them; isolate and scrutinize the candles that have developed on the left of the low/high candle to make your move.
How do you tell if this is it?
That is simple.
To keep the probability of successfully identifying the Fractals pattern, make sure you wait for the next two candles formation to act as pattern confirmation.
After searching through the trading chart and you find two higher lows to the left of the middle candle, it is possible that this is it.
Don’t jump with excitement yet.
Instead, wait for two more candles to form. If they are also higher lows, you got yourself a fully formed fractal.
Conversely, if you have identified a low point in the chart and found two lower highs to the left of the middle-lower low candle if two more higher low candles form, that is a complete bullish fractal pattern.
Now, to this point, you have a solid understanding of fractal patterns. But what you don’t know is that you do not have to manually search for this pattern on your Expert Option trading chart.
Instead, Expert Option has a Fractal indicator that you can easily add to the chart and it will do the heavy lifting for you.
With that said, here is how to add the fractal indicator on Expert Option:
How to set up the fractals on Expert Option
- Log in to your Expert Option account.
- Look for the indicators tab on the top right corner of your trading chart then click on it.
- Select the Fractal from the list.
- Choose the colors you are comfortable with.
- Click Apply to complete the setup.
Now, you are ready for the next step.
How to read the Fractal indicator signals on Expert Option.
Fractals pattern is very rampant.
Do not be surprised if you see a lot of arrows on your trading chart. These arrows are appearing on both the low and high points.
To trade successfully, therefore, you need to be disciplined and wait for the pattern confirmation. To do this, wait for two more candles to form to confirm the pattern, then enter the trade on the third candle.
Fractal helps you predict the market turning points. That is to say, the fractal pattern appears when the trend is reversing.
- Bullish fractal ( prices fall to the lowest point and rise) is a sign that the prices will go up.
- Bearish fractal (prices rising to a certain highest level, and then falls) is an indication of dipping prices.
The information provided does not constitute a recommendation to carry out transactions. When using this information, you are solely responsible for your decisions and assume all risks associated with the financial result of such transactions.