Use Wiseman Fractals to Identify Bullish and Bearish Reversals

The Wiseman Fractal is one of the easiest reversal signal indicators to read. This indicator performs best in trending markets where volatility is low and choppiness is at a minimum.

Fractal Geometry

A fractal is a recurring geometric pattern that echoes ever smaller with each repetition. Often found occurring in nature, technical analysts have also detected these patterns in the markets. Fibonacci is a more well-known example of a fractal patterns in technical analysis.

The Wiseman Fractal indicator was created by Bill Williams who is considered to be one of the forefathers of modern trading psychology. Williams used his expertise in psychology along with applied technical analysis and chaos theory in developing his trading approach.

How Does the Wiseman Fractal Indicator Work?

The Wiseman Fractal plots as simple either upward or downward pointing arrows over historical price data. Bearish reversals are signaled by upward pointing arrows and bullish reversals are signaled by downward pointing arrows.

The arrows, or fractals, are formed when a certain number of repeated bars align in a distinct manner. This number of repeating bars is configured by the Strength parameter in the Wiseman Fractal’s settings.

Using Wiseman Fractal with Other Technical Indicators

In the example below, the Wiseman Fractal is used together with the Relative Strength Index (RSI) Indicator plotted in the lower panel. The bullish and bearish reversal arrows serve as a potential buy and sell points, while the RSI crosses can serve to confirm or deny the thesis provided by the Wiseman Fractal.

This is just one of the countless examples where the Wiseman Fractal can be used in combination with other native NinjaTrader indicators for enhanced technical analysis. As always traders should be aware of the financial risks involved and the possibility of losing money. All indicators have the possibility of producing false signals, and the Wiseman Fractal is no exception.

Add the Wiseman Fractal Indicator to Your NinjaTrader Chart

1. Right-click within any chart
2. Select “Indicators”
3. Locate “Wiseman Fractal” from the available list of indicators in the upper left-hand section
4. Add the indicator by double-clicking it and click OK

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Source: https://ninjatrader.com/blog/identify-bullish-bearish-reversals-with-wiseman-fractals/