Technical Analysis

Fractals Indicator – How to use the Fractals Indicator?

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What are fractals?

Fractal geometry, defined by mathematician Benoit Mandelbrot,  is a geometric figure that can be decomposed into parts, each one of these parts identical on a smaller scale to the original figure. However, the “fractal finance” applied to technical analysis is a geometric pattern that can be observed regardless of the time frame used, either 1 hour, 30, 15 or 1 minute. There are some books on this subject and one of the most popular is “Trading Chaos” that was written by Dr. Bill Williams. In this book, Dr. Williams entered two important concepts, the  “Fractal UP” and “Down Fractal”,  which can be used as support and resistance respectively.  When both formations are crossed by the price, that indicate new levels for prices in both bull and bear markets.

The “Fractal Up” (it indicates a possible resistance), defined by Williams (Using a bar chart) is one pattern where the central bar has a maximum price that is greater than the maximum of the two bars to the right and higher than the maximum of the two bars on the left. On the other hand, the “Fractal Down” (it indicates a  possible support) is one pattern where the central bar has a minimum price that is less than the minimum of the two bars to the right and less than minimum of two bars on the left. We can observe the ideal fractal in the image:

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The Awesome Oscillator of Bill Williams

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The Awesome Oscillator (AO) is a technical indicator developed by Bill Williams which determines market momentum (the second of the five dimensions of the market according to Williams) at a specific time based on the last five bars, which momentum is compared with the momentum of the last 34 bars.

In this way the Awesome Oscillator is simply the difference between the simple moving average of 34 periods and the simple moving average of 5 periods which are calculated based on the midpoints of the bars (High + Low) / 2. The Awesome is displayed on the graph as a histogram:

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Bearish Deliberation Candlestick Pattern

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The candlestick pattern Deliberation Bearish is a trend reversal formation of 3 candles which occurs in uptrends and indicates that there is a probability of a change to a bearish trend. This pattern has an average level of reliability and can be identified as follows:
  • This formation is presented in uptrends.
  • In the first two periods white candles are formed with long real bodies. In the second period, the closing price is higher than the closing price of the first period.
  • The opening of the third candle occurs near the end of the second candle.
  • In the third period we can see a candle with a small real body, usually a shooting star or a spinning top which opens with a gap on the previous candle.

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Chart Patterns Formations in Trading

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Financial markets, including Forex, involves plenty of chart formations, while not all of them are effective. There are many pricing patterns available and some of them give an excellent profit while a few of them doesn’t work good. First and the foremost, the chart patterns must focus on double top pattern and it is the common criteria used to grab the best accuracy. With a possibility to grasp 78% result, trading becomes simple and effective.

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Inverted Head and Shoulders Chart Pattern

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Inverted Head and Shoulders – An Overview

Inverted Head and Shoulders chart pattern is most commonly used in performing technical analysis for guessing the present downtrend in the Forex market. Basically, the head and shoulders inverted chart is distinguished while the security rate encounters the following attributes:
  • Rates falling down to trough and further rising up.
  • Rates dropping down than the earlier trough and further climbing up.
  • At last, the rates dropping down once again but not so bad like the 2nd trough.
When the final trough reaches, the rate heads up across the resistance at the top of the earlier troughs. Traders enroll for a long time position, while the rate rises beyond the resistance. The 1st and the 3rd trough are described as the shoulders, while the 2nd peak signifies the head.

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Head and Shoulders Chart Pattern

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Description of the Head and shoulders

Head and shoulders is one of the promising and reliable chart patterns that are most likely used for both expert Forex traders and beginner traders with little experience in the market. There are plenty of charting patterns found in the forex market, but the head and shoulder pattern reflects the synopsis of the human being. Hence it is described as head and shoulder charting pattern. Novice traders will find this charting pattern quite difficult, but practice will make a man perfect. With little proficiency, the traders could distinguish this pattern visibly.
Like every other similar pattern, the head and shoulder pattern is framed with 3 rallies where the rally in the middle remains the highest known as the head flanked with 2 small rallies known as the shoulders. This formations is the opposite of the head and shoulders inverted.

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Disparity Index Indicator

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The Disparity Index is a technical indicator that measures the relationship between the current price of an asset over its moving average. Its development is attributed to Steve Nison based on his book Beyond Candlestick.
The Disparity Index can take positive and negative values​​. A positive value indicates that the asset price is increasing rapidly, while negative values ​​indicate that the price is falling. A value of zero indicates that the current price of the asset moves in line with the moving average.
When the Disparity Index crosses the zero level that reflects a rapid change in price direction and thus it can be taking an early indicator of increased momentum (force) in the direction indicated.

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Forms to use Fibonacci in Forex

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The Fibonacci indicator is a very powerful tool in Forex trading. It provides important levels that can be used individually in conjunction with other indicators and methodologies such as Candlestick Patterns, Price Charts, RSI, MACD, Momentum etc, and that levels can be used to establish entry points, Stop loss levels and Take Profit levels.

The Fibonacci indicator can be plotted over any time frame including 5 min, 1hr, 4hr, daily etc.

The traditional way to plot and analyze the price with Fibonacci involves looking back at the historical prices to identify the most important highs and lows. Depending on the temporality that is used to trade the market this would involve seeing more historical data to locate those levels that will be the reference to the Fibonacci retracements and extensions. The convergence of different Fibonacci levels can occur if the levels are placed on graphs of different Time Frame, when doing this can exist a convergence and the level become more relevant.

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Triple Bottom Reversal Pattern

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Description of triple bottom pattern

Many successful investors keep implementing well known chart patterns such as the “Triple Bottom” in their trading strategies model. Forex traders are not the exception as many traders around the world use formations as the triple bottom to take decisions regarding their trades in the market, including the opening and closing of market positions. The triple bottom chart pattern combined with other market analisys tools allows to discover important trading opportunites to speculate in financial markets like Forex.

Triple bottom chart pattern is also described as TB in short, which is a kind of technical chart analysis examined in the market bottoms. Being the most reliable and trustworthy form of chart pattern, the triple bottom remains outright in its character and it is described by 3 distinct lows within the market having the similar price standards. The triple bottom remains distinct to the head and shoulders chart pattern and the only difference is the 3 lows occurring in the bottom throughout the similar price level existing in the double bottom.

This formation is the opposite of the Triple Top Pattern.

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