Fractal (Up/Down)

The Fractal (Up/Down) is a advanced indicators indicator used in Skyrexio Strategy Builder for advanced market analysis and complex signal generation.

Introduction

The Fractal indicator is a reversal identification system developed by Bill Williams that identifies potential turning points by finding local highs and lows in price action. This advanced pattern-based indicator provides context-dependent signals for both LONG and SHORT opportunities based on support/resistance level breaks and reversal point identification.

How Fractal Works

Fractals identify potential reversal points by finding local extremes in price action over a 5-period window. The indicator marks significant highs and lows that represent potential support and resistance levels, helping traders identify key turning points in market structure.

Formation Rules:

• Up Fractal: High surrounded by 2 lower highs on each side

• Down Fractal: Low surrounded by 2 higher lows on each side

• Confirmation: Fractal appears 2 periods after formation (lagging indicator)

Key Applications: • Support/Resistance levels - Fractals mark natural support and resistance zones • Breakout confirmation - Price breaking fractal levels confirms trend changes • Entry/Exit timing - Fractals provide natural entry and exit reference points • Market structure analysis - Identify swing highs and lows for trend analysis • Stop placement - Use fractal levels for logical stop-loss placement

Market Psychology: Fractals represent points where market sentiment shifted. Up fractals show where buyers failed to push higher and sellers took control. Down fractals show where sellers failed to push lower and buyers stepped in. These levels often act as future support/resistance due to market memory.

Key Characteristics

Attribute	Details
Category	Advanced Indicators
Type	Pattern-Based Reversal System
Primary Use	Support/resistance identification
Timeframe	All timeframes supported (1m to 1M)
Confirmation	Volume, price action, momentum

Strategy Applications

🟢 LONG STRATEGY (Fractal Support Bounce)

Use Fractals for LONG entries when price bounces off down fractal support levels or breaks above up fractal resistance levels, indicating potential bullish momentum.

Base Entry Order (LONG)

Trigger Type: Once per bar close
Bar TF: 1H

First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Fractal
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Additional Entry Orders (LONG)

Additional Entry 1: Fractal breakout with momentum
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Fractal
Timeframe: 1H

AND

First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 55

AND

First Condition: MACD Line
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 0

OR

Additional Entry 2: Support bounce confirmation
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Low Price
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Take Profit Orders (LONG)

Rule 1: Exit condition - Next fractal resistance reached
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Fractal
Timeframe: 1H

OR

Rule 2: Exit condition - Overbought with momentum divergence
First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 75

AND

First Condition: Volume
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

OR

Rule 3: Exit condition - Volatility expansion warning
First Condition: ATR
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 0.035

Stop Loss Orders (LONG)

Rule 1: Stop loss - Price breaks below fractal support
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Fractal
Timeframe: 1H

OR

Rule 2: Stop loss - Volume confirms breakdown
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

AND

First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H

OR

Rule 3: Stop loss - Momentum reversal confirmed
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Below
Second Condition: MACD Signal Line
Timeframe: 1H

🔴 SHORT STRATEGY (Fractal Resistance Rejection)

Use Fractals for SHORT entries when price rejects from up fractal resistance levels or breaks below down fractal support levels, indicating potential bearish momentum.

Base Entry Order (SHORT)

Trigger Type: Once per bar close
Bar TF: 1H

First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Fractal
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Additional Entry Orders (SHORT)

Additional Entry 1: Fractal breakdown with momentum
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Fractal
Timeframe: 1H

AND

First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 45

AND

First Condition: MACD Line
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 0

OR

Additional Entry 2: Resistance rejection confirmation
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: High Price
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Take Profit Orders (SHORT)

Rule 1: Exit condition - Next fractal support reached
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Fractal
Timeframe: 1H

OR

Rule 2: Exit condition - Oversold with momentum divergence
First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 25

AND

First Condition: Volume
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

OR

Rule 3: Exit condition - Volatility expansion warning
First Condition: ATR
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 0.035

Stop Loss Orders (SHORT)

Rule 1: Stop loss - Price breaks above fractal resistance
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Fractal
Timeframe: 1H

OR

Rule 2: Stop loss - Volume confirms breakout
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

AND

First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: High Price
Timeframe: 1H

OR

Rule 3: Stop loss - Momentum reversal confirmed
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Above
Second Condition: MACD Signal Line
Timeframe: 1H

Advanced Strategy Combinations

Multi-Timeframe Fractal Analysis

Setup

Timeframe Hierarchy:

• Daily: Major fractal levels for long-term S/R

• 4H: Intermediate fractal levels for swing trading

• 1H: Execution timeframe for entries

• 15m: Fine-tuning entry timing

Execution

Entry: 1H fractal break confirmed by 4H structure Target: Next major fractal level Stop: Previous fractal level in opposite direction

Fractal + Alligator Strategy

Setup Process:

1. Identify fractal levels during sleeping alligator phase

2. Wait for alligator to awaken (lines separating)

3. Enter when price breaks fractal level in trend direction

4. Use alligator lines as additional confirmation

Execution:

• Base Order: Fractal breakout + awakening alligator

• Additional: Trend momentum confirmation

• Take Profit: Next fractal level or alligator exhaustion

• Stop Loss: Return to fractal level + alligator reversal

Fractal Support/Resistance Strategy

Key Levels:

• Major Fractals: Multi-timeframe confluences

• Minor Fractals: Single timeframe levels

• Fractal Clusters: Multiple fractals in same area

• Fractal Breaks: Confirmed breakouts with volume

Trading Rules:

• Respect major fractal levels as key S/R

• Look for fractal clusters for stronger levels

• Confirm breaks with volume and momentum

• Use fractals for logical stop placement

Risk Management Guidelines

Position Sizing

Strategy Type	Position Size	Conditions
Major Fractal Break	Standard	Multi-timeframe confirmation
Minor Fractal Break	Reduced (75%)	Single timeframe signal
Fractal Bounce	Small (50%)	Counter-trend play
Fractal Cluster	Increased	Strong S/R confluence

Fractal Reliability Factors

High Reliability

✅ Multi-timeframe fractal confluence ✅ High volume at fractal formation ✅ Fractal aligns with major trend ✅ Clear fractal break with momentum

Low Reliability

❌ Isolated single timeframe fractals ❌ Low volume at fractal formation ❌ Fractal conflicts with major trend ❌ Weak fractal breaks without momentum

Best Practices

For LONG Strategies

1. Support bounces - Look for price bouncing off down fractal levels

2. Resistance breaks - Enter when price breaks above up fractal resistance

3. Volume confirmation - Ensure fractal breaks are backed by volume

4. Trend alignment - Best results when fractals align with major trend

For SHORT Strategies

1. Resistance rejections - Look for price rejecting from up fractal levels

2. Support breaks - Enter when price breaks below down fractal support

3. Volume confirmation - Ensure fractal breaks are backed by volume

4. Trend alignment - Best results when fractals align with major trend

Common Mistakes to Avoid

• Chasing old fractals - Don't trade fractals too far from current price

• Ignoring volume - Always confirm fractal breaks with volume

• Single timeframe focus - Use multiple timeframes for better fractals

• No confirmation - Don't trade fractal breaks without momentum confirmation

Market Conditions Analysis

Market Type	LONG Strategy Effectiveness	SHORT Strategy Effectiveness
Uptrend	🟢 High (fractal breakouts)	🟡 Medium (counter-trend)
Downtrend	🟡 Medium (counter-trend)	🟢 High (fractal breakdowns)
Ranging	🟢 High (fractal bounces)	🟢 High (fractal bounces)
Breakout	🟢 High (fractal confirmation)	🟢 High (fractal confirmation)
Low Volume	🔴 Low (wait for confirmation)	🔴 Low (wait for confirmation)

Related Indicators

Indicator	Relationship	Link
Alligator	Bill Williams system component	Alligator
Volume	Breakout confirmation	Volume
ATR	Volatility context	ATR
Support/Resistance	Level identification	Pivot Points

Conclusion

Fractals are powerful tools for identifying natural support and resistance levels based on market structure. Their strength lies in providing objective, price-based levels that represent actual turning points where market sentiment shifted.

Key Takeaways

• PRIMARY USE: Support/resistance level identification

• SECONDARY USE: Breakout/breakdown confirmation

• TERTIARY USE: Logical stop-loss placement

• ALWAYS: Confirm fractal breaks with volume and momentum

Success with Fractals requires understanding that they represent natural market turning points. Use them to identify key levels where price is likely to react, and always confirm breaks with volume and momentum indicators for the highest probability trades.

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