Hello everyone, please I got a very important question to ask…
Please can someone tell me on how to determine the market trend or market direction from a multiple timeframe analysis point of view??
Hi and welcome. Your name includes “school of pipsology graduate”. Surely that was covered in the content of the training? Learn How to Trade the Markets.
If you can’t find what you are looking for in babpips forex education, why not try asking an AI application the same question. An example below from Microsoft Edge Copilot (free application)
You
how to determine the market trend or market direction from a multiple timeframe analysis point of view?
Copilot
Certainly! Determining the market trend through multiple timeframe analysis is a powerful technique used by traders. Let’s explore how to do it effectively:
- Top-Down Approach:
- Start your analysis on the higher timeframe (longer-term chart) to gain a general sense of the market sentiment and trend context.
- Identify key levels, price hurdles, and overall trend direction.
- For example, use the weekly or daily chart to establish the broader trend.
- Aligning Timeframes:
- Use a combination of timeframes to create a macro-to-micro view:
- Higher Timeframe: Determines overall market trends (e.g., weekly or daily charts).
- Medium Timeframe: Provides context on support and resistance (e.g., 4-hour charts).
- Shorter Timeframes: Offer precise entry and exit timing (e.g., 5-minute charts).
- Avoid Bottom-Up Analysis:
- Don’t start your analysis on the lowest timeframe and work your way up. This narrow view misses the point of multiple timeframe analysis.
- Instead, adopt the top-down method:
- Begin with the higher timeframe to understand the broader picture.
- Then look for trading opportunities on the lower timeframes based on this perspective.
- Common Timeframe Combinations:
- Here are some common timeframe combinations:
- Weekly/Daily (higher) with 4-hour/1-hour (lower) for swing trading.
- Daily (higher) with 30-minute/15-minute (lower) for shorter-term swing trading.
- 4-hour (higher) with 30-minute/15-minute (lower) for fast-paced intra-day trading.
- 1-hour (higher) with 15-minute/5-minute (lower) for classic day trading.
- 1-hour (higher) with 5-minute/1-minute (lower) for fast-paced day trading or scalping.
- Consistency Matters:
- Pick one timeframe combination and stick to it for an extended period.
- Avoid jumping between different combinations, as consistency improves your trading approach.
Remember, multiple timeframe analysis helps you see the bigger picture while fine-tuning your entries. It’s a valuable tool for making informed trading decisions.
For more detailed strategies and examples, you can explore the following articles:
- How To Perform A Multi TimeFrame Analysis + 5 Strategies1
- How To Use Multiple Timeframes Effectively?2
- What is Multiple Time Frame Analysis & How to Use It3
- Multiple Timeframe Analysis - How to Trade Multiple Timeframes4
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Hello Godlove - The explanation given above is a detailed summary from a highly experienced trader. Print it out and pin it to your wall.
But remember, before you start to use some trading tactic or technical indicator or chart pattern or any thing which is new to you and which you want to help your trading results, you must ask yourself why you need to use it. And this will tell you whether you need to use it.
I’m concerned you’re not highly experienced but already looking at using multiple time-frames - multiple. Would two not be enough for the purpose? Would one not be enough?
Exactly right!
Yes indeed. Quite a lot of beginning traders (I am not saying you’re one of them, of course!) tend to look at multiple time-frames unnecessarily, when they could actually see everything they wanted from one.
The classic example would be someone who has decided (perhaps very reasonably) that he wants the price-bars to be above a 30-bar rising moving average (just as an example) before looking at the price action for a potential long entry, and he wants to see that on the 1-hour timeframe from which he’s trading, and on the 4-hour timeframe “to confirm his directional bias” too, but he doesn’t quite appreciate that he could do all that with a single chart, simply by using both 30 and 120 MA’s on a 1-hour chart - so he’s actually making working out his directional bias unnecessarily complicated for himself.
This explains everything perfectly! appreciate the detailed breakdown.
I think these approach can helps you to see the bigger picture while timing your trades more precisely.
- Choose timeframes: Use a combination of long-term and short-term charts.
- Identify Trends: Look for overall trends on the longer timeframe (uptrend, downtrend, sideways).
- Zoom In: Check the shorter timeframe for entry and exit points aligning with the long-term trend.
- Confirm with Indicators: Use indicators like moving averages, RSI, or MACD to confirm the trend on each timeframe.
Just a question, and no rudeness intended at all, but since you said only a week or so ago that you know nothing about forex trading and have no experience of it, how is it that you’re now trying to “teach” us?!
I know that you work for prop firms, Merry, but I respectfully suggest that posting like this, trying to teach people here, really isn’t going to help your credibility or marketing at all?!
Hi Amy, it is a pleasure. I have been using ChatGPT for about 18 months, but certainly not every day, not even every week. Recently, I have taken to using the Microsoft embedded Copilot in windows - it sits in the tray to the bottom right of the screen in the image and it is denoted by PRE.
It is just really convenient to be there with one click, and is quite fast returning answers. Chat GPT was a bit clunky, and I was even paying for the Chat GPT4 until I realized for my purposes I could not see any difference betweeen 3.5 and 4, so stopped the subscription.
I really do encourage everyone, no matter what level of expertise you have in any subject, to experiment with this or any other Artificial Intelligence software, especially those from large companies and when it is free for use. My consulting agent recently summarized my CV into a 500 word precis, and I was really impressed with it. She asked me if I wanted any changes, and I could not think of any. Give it a go.
Draw a line on higher highs and attach the most recent higher highs. do the same with the lower lows. now if what you draw is ascending, so is the trend and also the opposite works. Remember to draw it on the mid term chart that you use (a bigger chart than the one you use to get entrance signals.