Chan Theory Indicator
Automatically mark fractals, strokes, pivots, and trade points so price structure becomes readable.
Indicator overview
Use Chan Theory to read market structure in layers: fractals mark local turns, strokes connect valid highs and lows, pivots highlight overlapping consolidation, and trade points flag divergence or pullback locations.
It works best when you confirm the higher-timeframe direction first, then wait for matching lower-timeframe structure. Solid fills and solid lines usually mean confirmed structure; dashed or lighter styles mean the structure is still provisional and may change before the close. Chan Theory is a structural framework, not a substitute for position sizing or risk control.
How to read the chart
- Top / bottom fractal
- A local high or low formed by three neighboring candles; unconfirmed fractals look lighter and may use a dashed border
- Stroke (pen)
- The smallest valid swing between adjacent opposite fractals; the latest unconfirmed stroke is drawn dashed
- Pivot
- An overlapping consolidation zone formed by at least three swings; states include forming, confirmed, extended, and broken
- Type-1 trade point
- Near the high or low after divergence, where the prior trend is losing force
- Type-2 / Type-3 trade points
- A pullback after leaving a pivot, or a third swing that no longer re-enters the pivot
Signal confirmation
Structure confirmation
A fractal, stroke, or pivot turns from preview style to solid after later price action confirms it
Type-1 buy / sell
A post-divergence extreme used to watch trend exhaustion
Type-2 / Type-3 buy / sell
A pullback that holds after leaving a pivot, or a third swing that stays outside it
How to use it
- 01
Confirm stroke and pivot direction on a higher timeframe, then wait for matching lower-timeframe trade points
- 02
Read trade points near pivot boundaries, prior highs/lows, or clear support and resistance
- 03
Treat unconfirmed fractals, strokes, and labels as previews until the candle closes
- 04
Use Type-1 points to watch exhaustion and Type-2 / Type-3 points for pullback continuation, not as guaranteed reversals
Violent gaps, very thin liquidity, and ultra-noisy short horizons that cannot form stable strokes or pivots.
Parameter guide
Show strokes that connect opposite fractals; pivots and trade points can remain visible if strokes are off
Show overlapping consolidation zones built from strokes or segments
Mark first buy / sell locations after divergence
Mark second buy / sell pullbacks after leaving a pivot
Mark third buy / sell locations when the third swing stays outside the pivot
For technical-analysis education only, not investment advice. Use independent judgment and risk controls.