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Multiple Timeframe Analysis 2

This document discusses techniques for multiple timeframe analysis in trading. It recommends starting with a broader analysis of higher timeframes like daily and weekly charts to identify overall market direction and key price levels, then analyzing lower timeframes like 4-hour or 1-hour charts to plan specific trade scenarios. The document emphasizes taking a top-down approach, considering both long and short trade possibilities, and using annotations to remain objective.

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1K views3 pages

Multiple Timeframe Analysis 2

This document discusses techniques for multiple timeframe analysis in trading. It recommends starting with a broader analysis of higher timeframes like daily and weekly charts to identify overall market direction and key price levels, then analyzing lower timeframes like 4-hour or 1-hour charts to plan specific trade scenarios. The document emphasizes taking a top-down approach, considering both long and short trade possibilities, and using annotations to remain objective.

Uploaded by

santanu_1310
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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CRO

Jonathan Ramírez Cataño

MULTIPLE TIMEFRAME ANALYSIS #2

This week we are delivering the second version of the series of multiple time frame analysis. We will
be exploring different techniques and considerations that will enhance the perspective in trade
decision making. Here we review some basics considerations and evaluate some important
questions we have to answer to us every while in order to stay updated about the asset we follow.

When programming certain strategies we must be aware of the common thinking of most
professional/institutional traders due to are them who shape the price movement in times of
uncertainty, has specific behavior in preparation of fundamental events or tend to push the price to
evident support or resistance levels.

Most traders pick their one time frame and then almost never leave it because. Or they just leave
their time-frame to go up to higher time-frames to find more trading opportunities – which basically
means they are hunting for signals on time-frames they shouldn’t be on. The correct approach to
trading is making a top-down analysis and not a bottom-up effort. Here is a TradeStation layout used
to have in perspective different considerations we have studied during the trading and to not forget
about it during the trade session:


Starting your analysis on your execution time-frame where you place your trades creates a very
narrow and one-dimensional view and it misses the point of the multiple time frame analysis.
Traders just adopt a specific market direction or opinion on their lower time-frames and are then
just looking for ways to confirm their opinion. The top-down approach is a much more objective
way of doing your analysis because you start with a broader view and then work your way down.

Obviously, the daily time-frame is less important if you are trading off the 1 hour time-frame.
However, a trader who never leaves his execution time-frame has a very narrow view on the market
and cannot put things into the right context.

One great tip we recommend while tracking a position, specially losing positions is annotate your
charts and stick to your considerations, making you not to fall to emerging moment doubts. All
charting platforms offer text objects and you can use them to directly write on your charts. It is also
advisable to mark the areas on your chart that are your areas of interest. This way you are less likely
to jump the gun and enter prematurely.

When it comes to actually performing your multiple time frame analysis, you don’t have to get too
fancy. But knowing what to do and how to approach it can help you build a time effective routine
that guides you through your trading sessions.


If you mainly use the 4 hour or 1 hour time-frame to execute your trades, you don’t have to spend
too much time here. Basically, you just want to get a feeling for the overall market direction and if
there are any major price levels ahead. Especially long-term support and resistance or weekly or
annual highs and lows should be marked on your charts.

On the daily time-frame, you have to spend a bit more time on. Here you analyze the potential
market direction for the week ahead and also determine potential trade areas. Again, draw your
support and resistance lines and mark swing highs and lows – even if you don’t use them in your
trading, it is worth having them on your charts because they are so commonly used.

Assuming that the 4 hour is your execution time-frame, this is where you map out your trades and
specific trade scenarios. Take the levels and ideas you came up with on the daily time-frame and
translate them into actionable trade scenarios on the 4 hour time-frame.

Always create long and short trade scenarios when doing your multiple time frame analysis. This
will keep you open-minded and it avoids one-dimensional thinking. A trader who is only looking for
short trades, will blank out all signals that point to a long trade. Or, a trader on a long trade will miss
the signals that could signal a reversal. Furthermore, separate your charting from your actual trading
platform. If you can see your open orders on your screens during your analysis, you are much more
likely to be biased during the analysis.

If you would like to learn more about this strategy or other far more complex and robust
strategies, please feel free to visit our website or get in touch using the information provided
below.

www.branch22.com trading@branch22.com

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