"About Top and Bottom Fractals" - Beginner's Science Popularization, Old White can take detours.

Top fractals and bottom fractals are fundamental concepts in technical analysis, commonly used to judge changes in market trends.
They are formed by a pattern of three candlesticks with no overlapping relationships, representing potential signals of high points and low points.

Top fractal formation: Among three candlesticks, the middle candlestick has the highest high, and the lowest low is also the highest.

Significance: Usually appearing in an uptrend, indicating that the upward trend may be ending and serving as a potential short-term high point signal.
Mainly viewed as a take-profit signal for long positions below, and also as an entry point for short positions in some small cycles, commonly known as shorting entry signals.

Whether it can be used as an entry point for short positions depends on multiple factors; this is just one of the reference factors for entry.

Its shape resembles a "pin" character.

Therefore, we need to pay attention: when top fractals appear consecutively, be especially cautious, as it may indicate an increased possibility of trend reversal.

Bottom fractal formation: Among three candlesticks, the middle candlestick has the lowest low, and the high point is also the lowest.

Significance: Usually appearing in a downtrend, indicating that the downward trend may be ending and serving as a potential short-term low point signal.

Shape: Resembles an inverted "pin" character.

Note: Bottom fractals are a sign of a trend reversal, but do not necessarily mean an entry signal; their validity needs to be verified with subsequent trend movements.

After a bottom fractal appears, it may indicate a trend bottom, but whether it is truly the bottom and whether to enter long positions must be confirmed through multiple bottom fractal patterns.

After the appearance of top and bottom fractals, the market may enter a sideways adjustment phase, re-selecting direction, either up or down. This is also the theoretical basis for judging whether to enter long or short positions.

Therefore, top and bottom fractals are key tools for judging trend reversals, but they need to be combined with other technical analysis indicators (such as support and resistance lines) and market trends for comprehensive judgment to improve accuracy.

The schematic diagrams of top and bottom fractals are as follows.