What is Fractals?
Fractals are tools used by traders to identify potential price reversals by observing the highs and lows of a group of five candlesticks. The key is to analyze how high or low the middle candlestick is compared to the two candles on either side.
There are two types of fractals:
Bearish Fractal: In a group of five candlesticks, the third (middle) candle has the highest high compared to the others.
Bullish Fractal: In a group of five candlesticks, the third (middle) candle has the lowest low compared to the others.
How to activate Fractals
To activate Fractals in MT4 or MT5, go to:
Insert > Indicators > Bill Williams > Fractals
You can customize the color and size according to your preference.
When you activate the Fractals indicator, arrows will appear above and below the candlesticks. These arrows are signals that traders often use to place orders. The arrow that appears above the candlestick is called a Bearish Fractal, while the one below is called a Bullish Fractal.
How to Trade Using Fractals
The arrow below, or Bearish Fractal.
If all three candlesticks are green and a bearish fractal appears, followed by two red (Sell) candlesticks, there is a possibility that the price chart may reverse into a downtrend, as shown in the example image. Traders might use this signal as an opportunity to place a Sell order.
The arrow below, or Bullish fractal
If the three bars on the chart are red and a Bullish fractal appears, followed by two more bars showing buying activity, it indicates a possible price reversal to an uptrend. Traders may use this signal to place a Buy order.
