Chaos Fractals Stock Analysis & Chaos Fractals Trading Signals

Developed by Bill Williams

A fractal is formed by three price bars

It is used to detect the bottoms or the top.

Up Fractal- defined as a middle bar with two lower highs on each side (A- shaped)

Up Fractal

Down Fractal- defined as a middle bar with two higher lows on each side (V-shaped)

Up Fractal

Trading Analysis & Generating Signals

Breakout Trading

The break out method of using fractals to initiate trades is to take trades based on the direction of a price breakout above or below most recent fractal.

Buy Signal

If stocks price breaks above the most recent Up Fractal enter long.

Stop losses should be placed below the lowest low of the most recent Down Fractal or second most recent Down Fractal.

Buy Signal Breakout Trading

Sell Trade Signal

If stocks price breaks below the most recent Down Fractal enter short.

Stoploss orders should be set above the highest high of most recent Up Fractal or the second most recent Up Fractal.

Sell Signal Breakout Trading