Hello fellow traders.
I wondered whether someone could unlock my dilema about MTF analysis?
I use the following indicators.
200 ema
21 ema
55 ema
MACD set to default settings.
Timeframes:
Daily
1 hour
15 min
Look for trend on daily chart. Downtrend is when 21 ema is below 55 ema and both below 200 ema. And uptrend is when 21 ema above 55 ema and both above 200 ema.
The ema’s on the 1 hour should agree with what the daily chart is doing.
Entry would be off the 15 min chart in direction of the overall trend.
This is where I get confused…
For example on the daily chart the ema’s are stacked in the correct order for a downtrend, I would be looking for possible “sells” providing the ema’s on the 1 hour chart are stacked in the correct order for a downtrend as the daily suggests.
My Question is, what should I do in the above example if the MACD is pointing up on the daily chart but the ema’s are pointing down? On the 1 hour chart should I be looking for trades in the direction of daily MACD or the ema’s?
Or
Should I wait until the daily MACD points back down to be the same direction as the daily ema’s before I look for trades once the 1 hour chart agrees with the daily?
Ahh. You have run into the great dilemma of indicator overload and lack of understanding. You can’t use an indicator without thorough understanding of their underlying mathematics. Even if you understand the indicator, you will have to carefully examine the contradictory signals that sometimes happen. Then you have to find some way to counteract “paralysis by analysis”.
The way that I solved this was to stop using indicators and pay attention to the price action. Much simpler and more effective.
I can’t help you with the indicators you mention as I don’t use them. But if it helps any you might give this some thought. When MTF trading price action will typically move in the smaller TF from high/low/low/high in a tunnel in a greater given direction. On a longer TF the given direction will be represented as PA moving across the high/low/low/high tunnel in that TF in yet a further given direction.
Now you’ve just got to pick a preferred TF and trade the high/ low with one eye on the longer and shorter TF’s either side. No indicators required.
just asking for general knowledge and not to analyze someone else’s trading methods. is this perhaps the type of scenario that helps illustrate the threshold between useful data and noise?
Noise is typically defined on the low TF’s. Which is why scalping is so difficult to get right on a consistant basis. Yes you could reason that a 5m or 15m TF for example is noise on a day or weekly TF. Its my contention PA will cross high/ low/ low/ high on all TF’s within a tunnel. Which is why I trade day TF and weekly TF highs and lows. Better to take a trade across the tunnel for 300 pips on a weekly than 20 pips on a 15m TF. Less inclined to get whipsawed! That said, the trick is to correctly identify the high/ low on your chosen trading TF and unfortunately theres no subsitute for practise and dare I suggest just the odd indicator? LOL