Trading strategy on a fractal reversal with the RSI filter

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Good, accurate Reversal Indicators

I have been a big fan of accurate reversal indicators which are really useful in joining the trend after a pullback. Over the last few months I figured out that the standard Bollinger Bnads. RSI and Stochastic indicators require some sort of extra enhancements with Fractals to pin point the most probable entry points.

Then I found certain custom indicators can be helpful in that sense other than fillings the charts with 4, 5 indicators. So following are the indicators which could be helpful you as well.

It will be extremely important if you share your thoughts here.

I deleted two indicators from your attachment on the post above because those indicators are decompiled ones.

The rest two indicators are also questionable because copywrite was deleted from the code, and it is impossible to know about real names of the indicators, who is the owner of them and who coded them.

Nick Rypock Trailing Reverse ( NRTR )

  • Key thread
  • Basic explanation/the theory – the post
  • Second version of AscTrend system – asctrend indicator together with NRTR indicator
  • NRTR_color_line indicator for MT5 – the post
  • First version of AsctrendND EA – This EA use Asctrend indicator as main signal and Nrtr indicator as filter:
    – How to install.
    – optimization results for M15 timeframe for EURUSD, GBPUSD, USDCHF and USDJPY;
    – backtesting results and settings for EURUSD M15 timeframe;
    – optimization results for this EA for EURUSD H4 using Balance + max Sharpe ration;
    – backtesting results with the settings ‘Balance + Sharpe ratio’, EURUSD H4;
    – optimization results of this EA with EURUSD M15 timeframe;
    – backtesting and the settings for EURUSD M15 with max Sharpe ratio;
    – this is the other settings which may be some preliminary settings for martingale version;
    – the other optimization results for GBPUSD M15
  • The second version of AsctrendND EA (verion 1.02) with TrendStrength filter added. Verion 1.02 with TrendStrength filter added. You can filter by NTRT AND/OR TrendStrength.
    – optimization results for EURUSD M15 (for 1 year), every tick, slow complete . for Balance max;
    – results for backtesting and the settings for EURUSD M15 timeframe, for one year with 2 indicators as the filters: NRTR Color Line and TrendStrength;
    – optimization results for GBPUSD M15 for 1 year – the results and set file are attached;
    – backtesting results and the settings for GBPUSD M15;
    – optimization results for one year for EURUSD H1 timeframe with Balance + max Sharpe ratio;
    – backtesting results with the settings for this EURUSD H1 with Balance + max Sharpe.
  • NRTR – indicator for MetaTrader 5
  • NRTR (Nick Rypock Trailing Reverse) – indicator for MetaTrader 4
  • NRTR WATR – indicator for MetaTrader 4
  • NRTR GATOR – indicator for MetaTrader 5
  • X2MA NRTR – indicator for MetaTrader 5
  • NRTR – indicator for MetaTrader 5
  • NRTR GATOR – indicator for MetaTrader 4
  • NRTR – indicator for MetaTrader 4
  • NRTR Color Line – indicator for MetaTrader 5
  • NRTR Rosh v2 – indicator for MetaTrader 5
  • more in search here

I deleted two indicators from your attachment on the post above because those indicators are decompiled ones.

The rest two indicators are also questionable because copywrite was deleted from the code, and it is impossible to know about real names of the indicators, who is the owner of them and who coded them.

Some of them are for MT4 –

  • NRTR – indicator for MetaTrader 5
  • NRTR (Nick Rypock Trailing Reverse) – indicator for MetaTrader 4
  • NRTR WATR – indicator for MetaTrader 4
  • NRTR GATOR – indicator for MetaTrader 5
  • X2MA NRTR – indicator for MetaTrader 5
  • NRTR – indicator for MetaTrader 5
  • NRTR GATOR – indicator for MetaTrader 4
  • NRTR – indicator for MetaTrader 4
  • NRTR Color Line – indicator for MetaTrader 5
  • NRTR Rosh v2 – indicator for MetaTrader 5
  • more in search here

3# Fractal-based Support and Resistance , RSI Filter Trading System

Price Action Trading System

Submit by joy22

This an is price action trading system.

Long Entry Position:

1: If Candle closes above FB resistance , open long postition.

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Short Entry Position
2: If Candle closes below FB support , open short position.

I RSI filter is On.

Central line Filter
1: Only enter buy/long if RSI(8) > 50
2: Only enter sell/short if RSI(8) RSI(8) > 60
2: Only enter sell/short if RSI(8)

Stop Loss 5 pips below entry bar.

Profit Target : on Supporte and Resistance or aggressive.

In the pictures Fractal-based Support and Resistance, RSI Filter forex system in action .

Share your opinion, can help everyone to understand the forex strategy.

Godness (Wednesday, 01 February 2020 15:21)

Zed (Thursday, 26 January 2020 15:37)

where are those indis

Simple. Add the indicator RSI (period 8) the following levels: 30, 40, 50, 60, 70.

Ken (Wednesday, 21 August 2020 00:44)

i am happy to let you know that I love this system of yours, the picture showed me that it will do great however, having gone through this system, I notice that some indicators were not attached according to the chart diagram above. some indicators like
RSI filter indicator
Fractal indicator
please, it will pleases me if you can send them to my email [email protected]

Thanks in advance and waiting for your amicable reply.

A Trader’s Guide to Using Fractals

Although prices may appear to be random, they actually create repeating patterns and trends. One of the most basic repeating patterns is a fractal. Fractals are simple five-bar reversal patterns. This article will explain fractals and how you might apply them to your trading strategy.

Key Takeaways

  • Fractal markets hypothesis analyzes the daily randomness of the market through the use of technical analysis and candlestick charting.
  • It examines investor horizons, the role of liquidity, and the impact of information through a full business cycle.
  • The market is considered stable when it is comprised of investors of different investment horizons given the same information.
  • Crashes and crises happen when investment strategies converge to shorter time horizons.

Introduction to Fractals

When people hear the word “fractal,” they often think about complex mathematics. That is not what we are talking about here. Fractals also refer to a recurring pattern that occurs amid larger more chaotic price movements.

Fractals are composed of five or more bars. The rules for identifying fractals are as follows:

  • A bearish turning point occurs when there is a pattern with the highest high in the middle and two lower highs on each side.
  • A bullish turning point occurs when there is a pattern with the lowest low in the middle and two higher lows on each side.

The fractals shown below are two examples of perfect patterns. Note that many other less perfect patterns can occur, but this basic pattern should remain intact for the fractal to be valid.

The obvious drawback here is that fractals are lagging indicators. A fractal can’t be drawn until we are two days into the reversal. However, most significant reversals will continue for more bars, benefiting the trader. Once the pattern occurs, the price is expected to rise following a bullish fractal, or fall following a bearish fractal.

Applying Fractals to Trading

Most charting platforms now provide fractals as a trading indicator. This means traders don’t need to hunt for the pattern. Apply the indicator to the chart, and the software will highlight all the patterns. Upon doing this, traders will notice an immediate problem: this pattern occurs frequently.

Fractals are best used in conjunction with other indicators or forms of analysis. A common confirmation indicator used with fractals is the alligator. It’s a tool created by using multiple moving averages. On the chart below is a long-term uptrend with the price staying predominantly above the alligator’s teeth (middle moving average). Since the trend is up, bullish signals could be used to generate buy signals.

While slightly confusing, a bearish fractal is typically drawn on a chart with an up arrow above it. Bullish fractals are drawn with a down arrow below them. Therefore, if using fractals in an overall uptrend, look for the down fractal arrows (if using a fractal indicator provided in most charting platforms). If looking for bearish fractals to trade in a larger downtrend, look for up fractal arrows.

Sometimes switching to a longer time frame will reduce the number fractal signals, allowing for a cleaner look to the chart, making it easier to spot trading opportunities.

This system provides entries, but it is up to the trader to control risk. In the case above, the pattern isn’t recognized until the price has started to rise off a recent low. Therefore, a stop loss could be placed below a recent low once a trade is a taken. If going short, during a downtrend, a stop loss could be placed above the recent high. This is just one example of where to place a stop loss.

Another strategy is to use fractals with Fibonacci retracement levels. One of the issues with fractals is which one of the occurrences to trade. And one of the problems with Fibonacci retracement levels is which retracement level to use. By combining the two, it will narrow down the possibilities, since a Fibonacci level will only be traded if a fractal reversal occurs off that level.

Traders also tend to focus on trades at certain Fibonacci ratios. This may vary by trader, but say a trader prefers to take long trades, during a larger uptrend, when the price pulls back to the 61.8% retracement level. Fractals could be added to the strategy: the trader only takes trades if a fractal reversal occurs near the 61.8% retracement, with all the other conditions being met.

The chart below shows this in action. The price is in an overall uptrend, and then pulls back. The price forms a bullish fractal reversal near the 0.618 level of the Fibonacci retracement tool. Once the fractal is visible (two days after the low), a long trade is initiated in alignment with the longer-term uptrend.

Taking profits could also involve the use of fractals. For example, if going long on a bullish fractal, a trader could exist the position once a bearish fractal occurs. Other exits methods could also be used, such as profit targets or a trailing stop loss.

Further Considerations on Using Fractals

Here are a few things to remember when using fractals.

  • They are lagging indicators.
  • Since fractals are very common, they are best combined with other indicators or strategies. They are not to be relied on in isolation.
  • The longer the time period of the chart, the more reliable the reversal. It’s also important to note that the longer the time period, the lower the number of signals generated.
  • It is best to plot fractals in multiple time frames. For example, only trade short-term fractals in the direction of the long-term ones. As discussed, focus on long trade signals during larger uptrends, and focus on short trade signals during larger downtrends.
  • Most charting platforms now include fractals in the indicator list.

The Bottom Line

Fractals may be useful tools when used in conjunction with other indicators and techniques. Fractals can be used in many different ways, and each trader may find their own variation. Using an alligator indicator is one option, and another is using Fibonacci retracement levels. While some traders may like fractals, others may not. They are not a requirement for successful trading and shouldn’t be relied on exclusively.

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