Fractals indicator is quite good at detecting turning points. Therefore, it's commonly used to identify support and resistance levels at stunning precision. But just one thing, MetaTrader 4 repaints the Fractals. For instance, a Fractal point was shown a few mins ago, but just now it disappears. I personally think this is a cheating. It covers up bad tracks and keeps the good after the fact. That's cheating, isn't it?
Enough for the legacy, here is the new Fractals indicator that doesn't repaint. "Fractals Paint" is its name, for now. It is best used on 30-minute chart. As the word "Paint" implies, this shinny new indicator does paint color to price bars blue or red depending on its signal. Blue bars mean the trend is bull (going up), and red bars mean the trend is bear (going down). If it's not red or blue, either there's no trend (moving sideway) or the signal is conflicting (can go up and can go down).
Again, blue = buy, red = sell, no color = wait. I'll be testing this indicator today (next 3 hours 30 minutes to be precise) before USA Employment Situation data is released. I believe if used in conjunction with fxfisherman economic forecast, this indicator can make us some real money.
To install this indicator to your Metatrader 4, save the FractalsPaint.mq4 to path ..\Program Files\MetaTrader 4\experts\indicators\. After you restart Metatrader, you'll see "FractalPaints" in custom indicators list (on the left).
I totally forgot to mention that Fractals work best on 30-minute chart for daytrader.
Fractal is totally different from other indicators for the fact that it is based on bars formulation. A fractal is a spotted chart pattern of support/resistance point. Other indicators such ADX, MACD and RSI compute its value from moving average. If you put 14-day period to them, the signal lags roughly 14 bars. Fractal on the other hand always lags 5 bars to spot a pattern.
If the fractal now is not red or blue, I either close my trade or wait. It's depend on your system. Says if your system has its own close rule, then no color should be interpreted as a "wait".
While reading some charts, I just got this idea pops up in my brain. Why don't I just reduce the lag to 3 bars. The normal Fractals use 5 bars to identify reversal formulation. That means the signal lags up to 5 bars. In typical small whipsaws, you'll see a lot of false signals. That is price going up when the Fractals show they should go down, or the other way around.
Attached FastFractals.mq4 is the fast version of Fractals Paint. I'm seeing some good improvement here. Look at the chart below, red bars are moving down and blue bars are moving up. This is not illusion, mate. The red or blue bars are painted at the open of the bars. WYSIWYG!
Let's put in some charts and see how it goes with the news. Fractals Paint is pretty new to me too. Normally I would use Super S/R 7 (derived from Fractals) to read support and resistance. Fractals Paint is used purely for reversal.
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.