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Envelope & Fractals Indicators

by | Sep 13, 2020

Disclaimer: Posts on the HyperTrader blog and associated HyperLinq websites are for educational and informational purposes only. These posts should not be taken as financial advice, nor are they meant to be viewed as trading advice. HyperLinq Inc. or the authors take no responsibility for any damages or losses.

Technical analysis trading strategies are grounded on the crypto market trends. Traders like to plan their strategy and have a market overview of what’s going on before placing any orders in the crypto market. To get that overview, the trader will use the technical analysis tools like Envelopes & Fractals indicators.

Envelope Indicator

An envelope indicator is a technical trading indicator that recognizes trading areas, to reinforce a price trend or overbought and oversold periods. It is deemed to be a trend and a lagging technical sign. The Envelope indicator’s concept is that the price tends to remain within a specific price range during normal market conditions. Nevertheless, when these market conditions become volatile, the price of crypto-coins can trend higher or beneath the envelope bands, indicating potential trading positions for crypto traders.

The Envelope indicator is usually determined using the MA where the simple MA allows limiting the upper and lower envelope bands. Still, crypto traders can also use an EMA. The Envelopes are outlined by placing the bands at a specific length above and below the crypto asset price. Throughout heightened volatility, crypto traders should put a more significant distance value or variation percentages to evade a whipsaw. Therefore, crypto traders will determine lower variation percentages for assets with low volatility.

Fractals indicators

Envelope & Fractals Indicators
Envelope & Fractals Indicator on HyperTrader

William Fractals is a technical analysis indicator presented by the well-known trader Bill Williams. Bill created the trading tool based on chaos theory and trading psychology. Fractals indicator main idea is that there is redundancy in price performance, and fractals can present awareness into the recurrence trading patterns. Fractals indicator looks typically like a five-bar model intended to recognize potential reversal points and identify the price path. To discover a fractal creation, a trader must watch for five consecutive price bars where the third bar signifies the highest high or the lowest low.

 On Hypertrader, the Fractal indicator is represented as arrows designated directly above or beneath the chart’s candlesticks. The arrow over the candlestick is called a “buy fractal” and the arrow beneath the candlestick is called “sell arrow”. When a trader utilized the Fractal indicator, the “buy arrow” represents a resistance, implying that a buy signal will transpire when the asset price goes past this level. The “sell fractal” functions as a support level, and when the asset price goes beneath this fractal, it can mean possible sell moment. 

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