Chaos Fractals Stock Indices Technical Analysis & Chaos Fractals Stock Indices Signals

Created by Bill Williams

A fractal is formed by three stock index price bars

It is used to detect the bottom or the top.

Up Fractal- defined as a middle bar with 2 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

Stock Indices Technical Analysis & How to Generate Signals

Breakout Trading

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

Buy Stock Indices Signal

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

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

Buy Stock Indices Signal Break-Out Trading

Sell Indices Signal

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

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

Sell Stock Indices Signal Break-Out Trading