Introduction to the Fractal Support Resistance Indicator
The Fractal Support Resistance Indicator is a support and resistance tool which is based on using swing highs and swing lows as horizontal support and resistance levels. This indicator actually uses fractals based on the higher timeframes, and fractals when zoomed in on the lower timeframes can be valid swing highs and swing lows.
What is the Fractal Support Resistance Indicator?
The Fractal Support Resistance Indicator is an indicator which automatically identifies and plots support and resistance lines using fractals.
It plots horizontal support and resistance lines based on fractals. The various lines it plots have different characteristics. For one, the colors of the support and resistance lines could differ. Some lines are also solid, while others are dashed. These various characteristics indicate that the support and resistance lines are based on various timeframes.
How the Fractal Support Resistance Indicator Works?
The Fractal Support Resistance Indicator uses fractals to identify support and resistance levels. It detects the latest fractals from varying higher timeframes which includes the 1-hour, 4-hour, daily, weekly, and monthly charts.
This indicator plots a resistance line whenever it detects a fractal above price action and a support line if the fractal it detects is below price action.
The color and characteristics of the line also represent the various timeframes. Below is the color coding scheme of the various support and resistance lines based on fractals from different timeframes.
- H1 – dashed green
- H4 – dashed gold
- D1 – solid dark orange
- W1 – solid red
- MN – solid fire brick
How to use the Fractal Support Resistance Indicator for MT4
The Fractal Support Resistance Indicator has no settings options which can be modified. This is because the script it uses is fixed. Traders can only modify the color and the style of line the indicator would use for various support and resistance levels.
This indicator can be used as a basis for objectively identifying support and resistance levels. Traders could then trade either breakout or reversal trades using these major support and resistance levels.
Buy Trade Setup
When to Enter?
Identify a bullish reversal price action on a major support level identified by the Fractal Support Resistance Indicator. Open a buy order as soon as a bullish reversal candlestick pattern forms on the support level. Set the stop loss below the bullish reversal pattern.
When to Exit?
Set the take profit target at a logical resistance line level.
Sell Trade Setup
When to Enter?
Identify a bearish reversal price action on a major resistance level identified by the Fractal Support Resistance Indicator. Open a sell order as soon as a bearish reversal candlestick pattern forms on the resistance level. Set the stop loss above the bearish reversal pattern.
When to Exit?
Set the take profit target at a logical support line level.
Conclusion
This indicator is an excellent technical indicator because it is not reactive and it is not lagging. The information it gives allows traders to anticipate where price might reverse or breakout. This indicator can be a very useful tool for technical analysis and market flow traders.
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