Fractal Breakout Strategy (by ChartArt)

The Fractal Breakout Strategy tool identifies key resistance levels via fractal tops and automates long entries when price breaks these levels during confirmed uptrends.

Usage

The strategy focuses on capturing momentum during breakout phases. A long position is initiated when the price crosses above the most recent fractal top, provided the trend—defined by the average of previous fractal highs—is rising.

Key usage points include:

• Breakout Trading: Identifying levels where historical resistance (fractals) is breached to enter long positions.
• Trend Filtering: Using an average of the last two or three fractal highs to ensure entries occur only when the market structure is making higher highs.
• Exits: The strategy automatically closes positions when the fractal trend shifts (lower highs) or after a user-defined number of bars has passed.
• Visual Analysis: Users can enable bar highlighting to see exactly where fractals are formed and plot a trend line that changes color based on the relationship between price and fractal averages.

Details

This script implements a 5-bar fractal detection method where a top is identified when the high of a bar is greater than the two bars preceding it and the two bars following it. To ensure reliability, the "no repainting" logic uses the price of the previous bar to confirm a breakout, preventing signals from appearing and disappearing during the current bar's formation.

The trend is calculated by averaging the prices of the last few detected fractal tops. If the current average is higher than the previous average, the trend is considered bullish. The script is optimized for higher timeframes, such as weekly or monthly charts, where fractal structures are generally more significant, though it remains functional on daily timeframes. This logic incorporates fractal definitions popularized by RicardoSantos and time-based exit concepts shared by barracuda.

Settings

Primary Settings

• Always exit each trade after this amount of bars later: Defines a fixed time-based exit strategy, closing the trade after a specific number of bars.
• Price type: Determines the source price (e.g., HL2, Close) used for calculating fractal levels and identifying breakouts.
• Use Fractal price average of the last 3 fractals instead of the last 2 fractals?: Adjusts the sensitivity of the trend filter by changing the number of fractals used in the moving average.
• Use the price of the last bar to prevent repainting?: When enabled, the script uses the most recent closed bar data to trigger entries, ensuring signal stability.

Visual Settings

• Highlight fractal tops in blue and color all other bars in gray?: Enables specific bar coloring to emphasize where fractal resistance levels are established.
• Draw a colored line based on the fractal tops?: Plots a line connecting fractal tops, which changes color to reflect the current trend and breakout status.

FAQ

How does the strategy determine a bullish trend? The strategy calculates the average price of the most recent fractal tops. If the current average is higher than the previous one, it indicates a sequence of higher highs, confirming a bullish trend.

On which timeframes does this strategy perform best? While the script works on various timeframes, it is most effective on higher timeframes like the weekly and monthly charts where market noise is reduced.

How can I access the Fractal Breakout Strategy? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.