Forex Trading Info

How to Trade Using Forex Fractal

Fractals essentially break down larger trends into extremely simple and predictable reversal patterns.You can use them for in various ways.
1. Finding the Forex Trend

In an uptrend a series of up fractals are broken more than the down fractals. the more bullish fractals are broken, the stronger the uptrend.
In a down trend, a series of down (bearish) fractals are broken more than up fractals. In the forex chart below we note how we have been breaking down fractals in the USDCHF pair since the fractal at point C ( August 6th 2007) to point D (September 30th 2007).
2. Consolidation

It is easy using fractals to identify ranging or consolidating areas. If prices move up and down between up and down fractals and cannot seem to open above or below the most current up and down fractals then the market is consolidated.

For example the Down fractal at point 2 (August 27th ) and the up fractal at point 1 (August 21st created a great consolidation point until Septmber 6th 2007 when then market crashed below the point 2 fractal.
3. Breakout points

One of the ways I use fractals is simply to use them as breakout points .This is especially true in the longer term forex trading charts. They especially work very well in daily ,240 min and 60 min charts. The rule of thumb is to wait for the price to open below a fractal and trade in that direction.

When used with other indicators it can be fantastic.
What other indicators work with Fractals ?
1. Trendlines

Most new traders do not know how to draw a proper trend line. by simply using only the bars with the fractal arrow as your trendline points, it makes your forex trading very easy. The example in the forex chart below shows the last up bullish trendline drawn from fractal.
The trendline is from point 3 to point 4
2. Other Indicators are

Moving averages
Bill Williams Awesome Indicator
Bollinger Bands
We shall discuss these later.