Good morning, traders! Today we will do an explanatory post on how a Multi-Timeframe Analysis (Weekly-Daily-4H) can be used to take a trade. The benefit of this is that we will be trading taking into account the short, medium, and long-term behavior of the price, which gives us a higher success rate. Many times, we take a trade focusing only on one timeframe, and we are missing relevant information of higher temporalities, such as areas that we are not seeing.
Let's see how it would look in practice:
🔸The first thing is to start with the chart with the higher temporality, in this case, the Weekly:
- We see here that the price is in a range and bouncing in the support zone where a strong bullish momentum was previously generated. This gives us a first bullish hint.
🔸Then, in the Daily chart (published), we see that the price bounces off the previously marked zone and breaks the downtrend channel. This is the second bullish sign.
- In addition, in this chart, we proceed to mark the potential targets of the movement.
🔸Finally, in the 4H chart is where we will look for our entry into the market:
- After the break of the bearish channel, the price begins a corrective process at the edge of the trend line. When the breakout of this structure happens, the optimal thing is to place an income above the last lower high of the structure to avoid potential fakeouts.
@ThinkingAntsOk if the trend on the 1w chart is up and the 1d while the 4h is down or vice versa?
If the asset in all or some of those time frames is in a sideways trend?
What's the cutoff point for using this method?
What's most important to take out of this method and what is less so?
ThinkingAntsOk
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@nir666, Good morning my friend! Good question. The multi-timeframe analysis is not particularly a method but rather a comprehensive way of understanding price action. The goal is, as trend traders, to try to find confluences, in short, medium, and long-term trends. Of course, we may see an uptrend in the long term and the short term, a movement in the opposite direction on a sideways move, but that does not mean that you cannot take a chance anyway. In addition, the point is to detect all the interesting areas and levels, that many times, using a single timeframe, we can lose sight of them.
If the asset in all or some of those time frames is in a sideways trend?
What's the cutoff point for using this method?
What's most important to take out of this method and what is less so?