Hi, from what I have been reading it’d suggested that you look at a 1 week or even 1 day chart to get an understanding of the overall picture of price movement and trend. You then drill down and go into a smaller time frame e.g 1hr to see if the trend is in line with the larger time frame. Then look to drill down even further to choose entry point.
The question I have is how far back do you look on a 1 week or 1 day chart to determine trend? Likely chance is you can see an uo trend but that could have started over 5 yrs ago so what good is that when comparing to a lower time frame? Or is it that your just looking at the last say 20 candles from current date / time???
You’re right about using a 5yr period chart while trading off a short time-frame strategy - no point. Some traders will say that a significant reversal level form even 5 years ago is worth noting but really they have nothing quantitative about such rules, just gut feeling.
Regarding timescale s is there a negative looking at monthly,weekly,daily aswell as the shorter timescales.You do get the “bigger picture” sometime s imo .
It’s all part of puzzle ,like how far your stop going to be .
Using 100 SMA or EMA should not matter much but when you want to drill down the lower TF say 15M or 30M, I think you would want to see the 100 EMA displaced on the 15M or 30M chart. What I am thinking is that 100EMA on daily chart would be equivalent to 24x100 = 2400EMA on the 1Hr chart or 4800EMA on the 30M chart and so on!
It all depends on what your strategy is - do you want to trade daily or weekly tend on say 15M chart or as a day trader or scalper you want to catch not only overall trend but breakouts and pullbacks on shorter TF!
If you zoom in on a chart you should be able to get more data. How far you go depends on your trading strategy and what type of trader you are. For most of the newbie, they are not interested in waiting patiently - the want to make money quickly i.e, Get in, Get done and Get out (Scalping with high stakes). What you need to know is that 20EMA on the 5M chart is about 6EMA on 15M chart!
I enter trend trades on the 4hr chart after lining up the Daily and 1hr like three ducks in a row. Hence all should be moving in one direction. I do not trade against the Daily trend.
Remember that an up trend is characterized by higher highs and higher lows, a down trend by lower lows and lower highs. Whichever time frame you look at, as price waves up and down if each new impulse shoots further than the one before and each new pullback does not pull as far back as the one before you have a trend (on that particular TF). Some would say 2 waves in a row make a trend, 3 would probably be a safer assessment.