You are right,the example is not absolutely 100% as per the definition...but it is a 5BF,I hope my next explanation will help
the 5 bar fractal is either a 2-3 or a 3-2 combination of higher highs and lower lows or lower lows and higher highs...It is an extremely visual pattern,very difficult to explain(unless you use the wide definition I just wrote) and code,but easy to recognize once you have seen several of them.
The important thing ,at least in my case,when I see a 5BF,as long as it meets the wide definition,is not to be strict with the definition,but to be absolutely disciplined with the rules for entry...so,lets explain the pattern(keep in mind my previous wide definition )
1-A Fractal 5BF,consists of 5 bars,after a prolonged move.
2-After a down move a 5BF has 3 bars with higher highs and 2 bars with lower lows...or 2 bars with higher highs and 3 bars with lower lows
3.After an uomove a 5BF has 3 bars with lower lows and 2 bars with higher highs...or 2 bars with lower lows and 3 bars with higher highs
4-Rules for entry Short
4-1:After an upmove,wait for a 5BF to form(1,2,3,4,5 in the chart)
4-2:Wait for a new bar to CLOSE below the bar number 5 low:trigger bar(T in the chart)
4-3:Entry short below the LOW of the trigger bar(red entry line)
4-4:Place a stop order slightly above(3/5 pips +spread ) EITHER the HIGH of the Trigger bar OR the HIGH of the fractal formation
4-5:Target a major swing low prior to the fractal formation.
5-Rules for entry Long
5-1:After a downmove wait for a 5BF to form(1,2,3,4,5 at the bottom of the chart)
5-2:Wait for a new bar to Close above the bar number 5 High,trigger bar(T)
5-3:Entry long above the high of the trigger bar(red entry line)
5-4:Place a stop slightly below(3/5 pips)EITHER the LOW of the trigger bar or the LOW of the 5BF formation
5-5:Target a prior major swing high area.
I believe that a picture is worth a thousand words...so,please see attached chart.
Thanks for the explanation...it is much appreciated!
Bar 4 in the picture seems to be an inside bar...it doesn't have a higher high.
The more you teach about applying these patterns to forex the better.
I am basically just looking for a few good patterns to use for confirmation of support/resistance areas either from pivots points, camarilla or the service I recently subscribed to that gives s/r numbers in advance(they seem to be pretty accurate and I would like to use the patterns for confirmation).
Have you ever heard of a pattern/system called PULSAR?
I received the book a few days ago, and I must honestly say that it is probably the best $60 I have spent in my life. It is something that every trader must have. You can develop at leat 20 profitable trading systems from it. You have precise rules on how to use every pattern described.
Thanks Simba for introducing this topic and the book!!!!
RickW00716, can you explain PULSAR system with graphics(like Simba)?