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 an uptrend, I would be looking for possible “buys” providing the ema’s on the 1 hour chart are stacked in the correct order for an uptrend as the daily suggests.
My Question is, what should I do in the above example if the MACD is pointing down on the daily chart but the ema’s are pointing up? 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 up to be the same direction as the daily ema’s before I look for trades once the 1 hour chart agrees with the daily?
Thanks for any help you can give me.
This question really boils down to the old debate on how useful are indicators. My chart sounds similar to yours, in that I use the 21, 50 and 200 emas. I have, however, removed the MACD from my chart as I found that I was not consulting it, so I preferred more clear space on my screen.
To answer your question specifically yes, in theory for the highest probability trades then MACD should be in accordance with your emas, so if you have divergence between the two the probability of the trade working out in your favour is lower and, therefore, when taking a safety-first approach you would not take the trade.
However, I found over time that if the trend on the multiple timeframes was in agreement, and if the emas were where I wanted them, and I was not cutting across any other S&R levels, then I could simply ignore the MACD part of the setup and still hit a good return rate. But that is a personal thing that comes from experience, so you will have to decided which approach is for you. Personally, I found that the emas would ‘overrule’ the MACD more often than the MACD would win the debate, but obviously I do not know the rest of your strategy (eg. how big a move you are looking for).
Anyway, hope that helps - I trade both Daily and Hourly and for me the emas beat the MACD. Sometimes waiting for a ‘perfect’ setup can mean that there are too few setups to make trading worthwhile. Other people are happy to sit on their hands for quite a while knowing that they have a good chance of catching a big move if they wait for all their factors to line up. Tough to guess in advance which you will ultimately be.
ST