# Fractals in Forex

Fractals are a mathematical vocabulary term, but they’ve been turned into technical trading tools, as well. In forex, trading platforms like Metatrader 4 and TradeStation keep traders from having to explore fully the mathematics of the indicator. Rather, traders simply need to know how fractals work, and how they can be used in profitable forex strategies.

Fractals occur as a function of 5 trading bars. There are two types of fractals, buy and sell fractals:

1. Buying Fractals – A buy fractal forms at the highest bar of a set of five trading bars. On each side of the fractal you should find two lower bars.
2. Selling fractals – A selling fractal forms at the lowest bar of a set of five trading bars. On each side of the fractal you should find two higher bars.

### Fractals: Their Use in Forex Trades

Because fractals are a mathematical finding, there is no explicit method for using fractals in forex trading. Bill Williams outlined several techniques for using fractals in your trading strategy, and any one of the following fractal uses are quite profitable and popular with traders.

Fractals for Trendlines and Horizontal Support or Resistance

One method to employ fractals in your trading strategy is to use each fractal point as a point of reference for horizontal support and resistance lines, as well as diagonal trend lines.

1. Support lines – Support lines can be made by drawing a trend line through several different forex fractals that appear on the chart.
2. Resistance lines – Resistance trend lines can be made by drawing a line through several different forex buy fractals on a chart.

### Fractals Confirm Forex Trends

We can use a derivative of our trend line studies to confirm market sentiment, or momentum. When the market is in a strong bear market move, there will be several more broken sell fractals than buying fractals. When the market is in a strong bull market, there will be several more broken buy fractals than selling fractals.

Furthermore, we can see ahead of time the end of a trend. If a forex pair fails to push through the previous high or low fractal, the trend is consolidating. (If we were to use the fractal indicator with another Williams Indicator, the Market Facilitation Index, we would most likely see a pink bar forming.)