I have a basic understanding of how to use a higher timeframe, but I still have some questions.
For a four hour entry time frame, would a daily chart or weekly chart be better if I were to do just one higher timeframe?
If the higher timeframe is at resistance in an uptrend, would you stay out of all trades until that changes?
If the higher timeframe is ranging, does that mean no trades?
Any response would be greatly appreciated!
In my opinion using a daily chart as the trend identifier and the 4h chart for entry/exit is a good combination. They are far enough apart to be showing different parts of a move but near enough to be reflecting the same overall move.
A more aggressive combination, generating more trades but with less accuracy. would be to use a1h chart with the daily.
If the daily is at a resistance then i would suggest watching the 4h or 1h for confirmation of a break through it or a bounce off it.
If the daily is ranging then one can either trade the range using a1h chart for example or just wait for a new trend to start or even look at another instrument to trade.
Okay, that makes sense. Say I trade off the 4H chart. Would it be best to draw S/R off of both the 1D and 4H or just the 4H? Also, say I trade off the 1H chart. Would it be best to draw S/R off of all three, or some other combination?
Personally i find S/R lines on 1h quite meaningless. I would suggest you mainly draw them on the daily then you can look if any 4h lines coincide and therefore form a stronger level combined.
If you draw separate lines from all three tfs you will end up with so many lines that you won’t be able to decide which ones to observe and probably end up taking profits too soon and missing out on the longer moves which are, afterall, the main reason for using the daily chart in the first place.
Would it be discouraged to ignore the 4H charts and only look at 1H and 1D?