what are fractals in forex trading

occurs amid larger more chaotic price movements. The fractal is indicating the possibility of a trend change. On the chart below is a long-term uptrend with the price staying predominantly above the alligator's teeth (middle moving average).

Leaving aside the mathematical and technical description of fractals, in essence, I use them in forex trading so that my mechanical trading system can break down larger cluttered price movements into very simple and highly predictable views of trends and reversals. Other exits methods could also be used, such as profit targets or a trailing stop loss. Step # 3 Price Action Need to Break Below Fractal Candle That was Distinguished in Step #1 Step #4 Exit the trade when two of the alligator lines cross over each other. Like this: Step # 3 Price Action Need to Break Above Fractal Candle That was Distinguished in Step #1 Once you see that five consecutive candles did not make a drastic move to the downside and stay in between the high of the fractal candle. Since mechanical trading systems are able to calculate fractal values and act on them quickly, there are plenty of fractal-based trading opportunities. Many argue that every indicator is "lagging" and rarely show you profitable entries. In the case above, the pattern isn't recognized until the price has started to rise off a recent low.