Definition

The Fractal Chaos Bands are a technical study aimed at identifying market breakouts and the persistence of trends by looking at new highs and lows. When a new high is the highest compared to the previous two highs, the Upper Band holds its value and moves sideways, signaling an upside breakout. The Lower Band operates in a similar but opposite fashion, focused on new lows. If the market isn't trending, the bands display values from two bars ago.

Suggested Trading Use

When you see the Upper Band holding its value and moving sideways, it suggests an upside breakout. This could be a point to consider entering a long position or holding onto your existing long trades.

On the flip side, if the Lower Band is holding its value and moving sideways, it indicates a downside breakout. This might be an opportune moment to consider entering a short position or being cautious with any long positions you hold.

If the bands are displaying highs or lows from two bars ago, it implies that there's currently no strong trend in the market. In such cases, you might choose to hold off on entering new trades until a clearer trend is observed.

The Fractal Chaos Bands offer you a straightforward way to monitor for breakouts and assess the strength of ongoing trends, aiding you in timely trade placement or adjustments.