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Now let us us see how can we use both, that is the fractals and Simple Moving Average(SMA or MA) to trade the markets. The general principle is very simple. When MA16 moves downward, all the fractals(upside and downside fractals) must be UNDER MA16 and when MA16 moves upward all the fractals(upside and downside fractals) must be ABOVE MA16. Of course, some bars or even fractals would penetrate MA 16 in both directions, but the above stated is the main idea, and about penetrations we shall speak in the section concerning stoplosses and methods of closing the previously opened position.

At this chart we may see, that MA16 is directed downward and fractals are UNDER MA16.

At this chart we may see, that MA16 is directed upward and fractals are ABOVE MA16.

We all know that the price goes up and down and therefore we should find the place where the given trend(direction of price movement) will be changed or broken.

How should we do it ?

It is also very simple. In accordance with Bill Williams, we should wait or look for at least one(though two are much better) fractal(s) opposite for the current trend with its(their) central bar(s) protruding beyound MA16. That means that if MA16 is directed downward the highs of the central bars of these fractals should be ABOVE MA16 and if MA16 is directed upward the lows of the central bars of these fractals should be UNDER MA16. When such bar(or two bars) is(are) broken it is a signal for us to enter the market.

Red dot here marks the opposite to previous trend(upward trend) fractal with the central bar protruding beyond Ma16. When this fractal was broken(that is when the price and better bar or candle "close" goes lower than the low of this fractal central bar) we enter the market selling euro/usd.

• EUR / USD
• USD / JPY
• GBP / USD
• USD / CHF
• AUD / USD
• USD / CAD
• EUR / JPY
• AUD / JPY
• GBP / JPY
• EUR / GBP
• GBP / CHF
• EUR / CHF