When looking to set up for a trade, I was told to look at a day chart and to put on a 200 period moving average to gauge the general trend.
I want to try one small long term trade but most of my trades are opened and closed in anything from 10 mins to a few hours.
Would I be better off pulling up a comprehensive 15 min chart to guage the trends of the day? I realise a short time frame means it is less reliable but it seems looking at a years worth of days, seeing a downtrend and then going in to a lower timeframe chart and seeing big uptrends is counter productive.
I ask the question from a technical point of view as I understand fundamentals on the day will play a major part.
TIA.
Seeing a countertrend on a lower timeframe is not necessarily counter-productive. For example, If your primary trade timeframe is the Daily and you’ve determined from that timeframe that the trend is falling… then you look at 15min and see a rising trend, it could mean your Daily trend is doing a pullback. You can then study the 15min chart until you see that it has run out of steam and then jump aboard a short just as your primary Daily trend is getting ready to take off again.
In this way you can use smaller timeframes to spot precision entries and targets for larger timeframe trades.
Oh one more thing I forgot: make sure the two timeframes you’re looking at are relevant to each other. For example, you might find that Daily and 15min are too far apart to be relevant. If so, just tighten the gap: such as Daily and 1hour timeframes.
Thanks for that. I will look at the daily vs hr charts and see what I can see.
Ive been watching the eur/usd and whilst it appears to be on a long term down trend, since the beginning of Oct, its had some pretty healthy gains.