A turning point in the Forex and Stock Market refers to a point at which the market changes direction. A turning point can happen for a variety of reasons, including changes in economic conditions, political events, or shifts in investor sentiment, etc. Predicting turning points in the Forex and Stock Market is difficult, and many traders use a variety of technical and fundamental analysis tools to try to identify potential turning points. Some common technical indicators used to predict the turning point include moving averages, trend lines, and support and resistance levels, etc. In addition to technical analysis, traders may also use fundamental analysis to identify potential turning points. This involves analyzing economic data releases, central bank policy decisions, and other factors that can impact currency values. In this article, we will look for more technical explanation towards the turning point, exclusively based on their price dynamics regardless of their causes. We will do that by studying the geometry of the price in Forex and Stock chart.

To recognize the geometric shape in our chart, we need a measurable object. In financial market, the geometric recognition is done in the two dimension of price and time. Price is usually placed in Y axis and time is usually placed in X axis. In financial market, we recognize the geometric shapes in the candlestick chart. Some might use range bar chart. In this book, we will be using candlestick chart most of time because they are easy to read. When we look at the plain chart, we can recognize almost nothing. It is because we do not know which object we will be studying in the continuous price series. For an object to be measurable, the object requires boundary or outline. Hence, to recognize any geometric shapes in our chart, we need a good logic of dividing the continuous price series into some measurable objects. Typically, it is best to start with Peak Trough Analysis.

In Peak Trough Analysis, we define peak and trough in an alternating manner. The analysis will start from oldest price data to latest price data. If we start with peak, then we will detect trough, peak, trough, peak, and so on to the right. If we start with trough, then we will detect peak, trough, peak, trough, and so on to the right. Each peak and trough requires having the certain distance in price and time. Doing this manually could be quite tedious. Fortunately, there is a Zigzag indicator available everywhere to do this task automatically. At the same time, we provide Peak Trough Analysis free for audience of this book. Please refer to the downloading guide for Peak Trough Analysis tool in this book.

Once the Peak Trough Analysis is done, your chart will look like this. What peak trough analysis is doing here is that turning the continuous price series into many triangles. Three points are equivalent to one triangle. For example, a set of peak, trough, and peak can form one triangle. Likewise, a set of trough, peak, and trough can form one triangle too. When we just label peak and trough, it is hard to notice the presence of these triangles. However, if we provide the outline to each triangle, then you could see them more clearly.

The triangles created from Peak Trough Analysis is now measurable because they have triangular boundary (i.e. outline). In financial trading, we use these triangles to make the geometric prediction. Hence, Peak Trough Analysis is the important preliminary analysis to start with. So far, we have covered definition of peak and trough in our chart. In the trading community, trader tends to use swing high and swing low instead of the term “Peak” and “Trough”. Hence, many traders interchangeably use swing high with peak. Likewise, people interchangeably use swing low with trough too.

At the same time, people can use the term “Turing Point”. “Turing Point” is slightly different because “Turning Point” includes both peak and trough. It is like the word limb including both arms and legs. In addition, people might use the term “zigzag” in place of turning point. This is probably inspired from the Zigzag technical indicator. The term “zigzag” also includes both peak and trough. Each terminology can be used in slightly different context elsewhere. For example, Peak and trough are the terms used in many scientific articles whereas swing low and swing high are specific in trading community. However, in this book, we might use these terms interchangeably.

 Peak Trough Swing High Swing Low Turning Point Turning Point ZigZag point ZigZag point

Table 1.2-1: List of words describing peak and trough in the financial market

We provide the powerful application to detect the turning point in Forex and Stock market using ZigZag indicator. We provide this application for free. The download link and the full instruction on how to use this tool can be found from the link below.

Two steps are required to use this application.

Firstly, load data either from Excel or from CSV file. For example, you can simply load the data from Yahoo Finance or from your MetaTrader platform.

Secondly, after the data is loaded, click on “Perform Fractal Decomposition” button to produce outputs.

That is it. Once the computation is done, you can access the following information to predict the turning point.

1. ZigZag indicator for multiple cycles (up to four cycles from small to large)

2. Turning Point Probability Graph

3. Turning Point Probability Matrix for more detailed analysis.

Turning Point Probability matrix works like correlation matrix. You can find how to use the turning point probability matrix from the link below.

What is even better? You can import all these data to your Excel or to CSV file in just one button click. This application is absolutely free. You are free to use this application and you are free to share this free tool on the internet. There is no restriction in using this free tool.

In addition, the video tutorial below can be helpful in using the Fractal Decomposition Analysis Tool for Forex Market.

YouTube Video 1 (Predict Forex Market Tutorial): https://youtu.be/o89AoYayfd8

The video tutorial below can be helpful in using the Fractal Decomposition Analysis Tool for Stock Market.

YouTube Video 2 (Find Turning Point in Stock Market): https://youtu.be/Pmv7z5LXBEo

Fractal Pattern Scanner is the paid indicator that can find the turning point in Forex and Stock market using Fractal Cycle Analysis up to four Fractal Cycles. Advantage of Fractal Pattern Scanner is that you can do Fractal Cycle Analysis directly on MetaTrader 4 and MetaTrader 5. Here are the landing page to Fractal Pattern Scanner for MetaTrader 4 and MetaTrader 5 platform.

https://www.mql5.com/en/market/product/49170

https://www.mql5.com/en/market/product/49169