Bill Williams' Fractals are a technical analysis tool to identify potential reversal points in price trends. A fractal is a specific five-bar pattern that signals a possible change in market direction.

Formation Rules:
Bullish Fractal (Buy Signal):

The middle bar must have the lowest low in the five-bar sequence.

The high of the middle bar must be lower than the highs of the two preceding and two succeeding bars.

Bearish Fractal (Sell Signal):

The middle bar must have the highest high in the five-bar sequence.

The low of the middle bar must be higher than the lows of the two preceding and two succeeding bars.

Key Mechanics:
Fractals appear on all timeframes but are more reliable on higher ones (e.g., daily or weekly charts).

They are often used alongside indicators like the Alligator or Awesome Oscillator for confirmation.

Only the most recent fractal beyond the Alligator’s teeth (a moving average filter) is considered valid for trading.

Fractals help traders spot market turning points, but should not be used in isolation due to false signals.