Again, fractals ...

A formation is a positive lever: a pulse greater than rollback - profit. But the formation of B indicates a negative leverage. The upward movement of weaker downstream, less recoil impulse, and the trader gets a loss. The same logic and formations of C and D. In order to automatically identify fractals on the chart, use the indicator Zig Zag. As an option it will choose a deviation of 5%. The result can be seen in the figure. Fractals are denoted by a sequence of three numbers. For example, fractal 1-2-3 - a true bullish fractal, fractal 11/12/10 - true bearish fractal.

It is easy to see that the same graph can be represented by different fractals. Pay attention to the upward movement. It can be represented by the real bullish fractals - 1-2-3, 3-4-5, 5-6-7, 7-8-9. A can be described by a set of false bearish fractals - 2-3-4, 4-5-6, 6-7-8. Accordingly, each individual price bar can simultaneously belong to different fractals. Using fractal analysis, the trader tends chaotic movement in prices give some structure. Very often the same price formation different traders is either included in the bullish or as bearish. Usually it depends on the trader's personal persuasion, which is supported by an open position.

But back to the analysis of the graph. We draw attention to the area 8-9. Trader holding a long position perceives fractal 7-8-9 as a true bull. On the section 7.8 of the observed pulse, and the section 8.9 is seen as a rollback. In any case, the trader expects that prices will not fall below 7, eventually forming a true bullish fractal, and thus, the lever will be positive. But it is likely that in the interval 8.9 were open short positions. Bear-minded trader sees this sector as the true momentum bearish fractal and expects to roll back price will not exceed the level of 8. In the end, this was the case - point 10 below the 8, of the true bearish fractal 08/09/10.

Is there a conflict?

There is a conflict: on the interval 8.9 one trader is in a long position on a pullback true bullish fractal, and the other a short position, following the impulse of true bearish fractal. Who is right? In reality there is no contradiction. To understand this, it is enough to accept the philosophy of fractal analysis: fractal - it's a formation that defines the current state of the market and showing the prevailing mood of the participants. But to define the mood is only possible after the final formation of a fractal. The future can not be seen, so fractals do not predict price movement.

Typically, businesses do not try to catch the bottom or top. They open position in the direction of the prevailing trend. In this case, the trader expects that it is in the momentum and keep the lever next pullback positive. In order to determine right or wrong, it is enough to wait for the completion of the formation of a fractal. If a trader guessing it probably is the position and will continue to monitor the formation of a new fractal. If his expectations are not confirmed - he will try to close the position.