Fractals are tools of technical analysis developed by successful trader Bill Williams. Fractals define very complex and chaotic structure of price movement into smaller waves. As such, they can help us to find order and structure in the markets.
Many people believe that the markets are random. However, many others argue that although prices may appear to be random, they do in fact follow a pattern in the form of trends. Fractals essentially break down larger trends into extremely simple and predictable reversal patterns.
Bill Williams believed that in order for you to make money in the markets, you first must be able to understand the basic market structure by being aware of the markets internal parts which he called dimensions.
These dimensions included the following:
– Fractals (the phase space)
– Zones (the phase energy and force combination)
– Momentum (the phase energy)
– Deceleration/Acceleration (the phase force)
– Balance Line ( odd attractors)
We are going to focus on the first dimension, the fractal along with momentum