Some individuals often believe that the money markets are random.
While others think that though prices may occur randomly, they still adhere to a distinct pattern in trends.
In essence the fractals indicator happens to be one of the most viable ways of ascertaining the direction of these trends.
By their ability to conveniently break down larger trends into much simpler and more predictable reversals patterns.
You can think of fractals as recurring patterns that can accurately predict reversals among much larger as well as disorganized price movements.
These indicators are for the most part identified by two rules, which are; a bearish turning point that happens when a pattern with the highest high sandwiched between two “lower” highs.
Or a bullish turning point occurring when a pattern with the lowest low is sandwiched between two “higher” lows.
The fractals indicator is mainly used by traders as a confirmation tool, and is commonly utilized alongside indicators.
This goes a long way in enabling traders to accurately determine if a reversal has occurred.
One of the most widely used Forex market indicator that takes into account fractals geometry happens to be the alligator’s indicator.
The standard rules of using this analysis tool is to buy beneath the alligator’s “teeth”, which essentially is the center average.
And sell above the alligator’s “teeth” .
It is however important to take note of the fact that that the fractals indicator is usually lagging, and cannot be accurately drawn until two days after a reversal.
As well as the fact that the longer the time period (ideally the number of bars needed for a fractal), the more reliable the reversal will be.
All in all, as a rule of thumb you should always use this indicator along with other indicators to effectually analyze the money markets’ trends and not by itself.
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