I’ve recently started using the Parabolic SAR function and read that when the dots start above the candlestick then they are most likely to go down in a downtrend and if they start below the candlestick then they would go in an uptrend.
It worked for me when analyzing the charts, but I realized that when I was viewing in the H4 window for EUR/USD, the [B]results were different[/B] than the H1
[B]H4[/B]
[B]The green dots show that it is still a downtrend[/B]
[B]H1[/B]
[B]But here in H1 it shows that they are forming an uptrend[/B]
Why is that? [B]Which one should I follow?[/B]
Thank you
Pretty easy as to why it’s happening. Shorter time frames are for when you want to trade within that short period of time, but you sacrifice accuracy. From a 1H perspective, things are turning upward (I’d hardly call that an uptrend anyway. Zoom out a bit. You’re merely consolidating.), but the 4H knows better, and until it breaks more towards that 1.0950 area, you’re still officially in a downtrend from a 4H perspective.
When in doubt, go with the longer timeframes. Technical analysis concepts work more often the higher timeframe you go.
Hi zaidz
It’s important to remember that the price exists on different time horizons.
The differences between the charts, is that in the H4 chart, the candlestick is formed over a 4 hour period. A bearish candle stick will form if the price after four hours is lower than it is now. Even if there was an hour, in which the price went increased.
Which timeframe you should follow, is up to you and your trading preferences. For example, trading the H1 chart will be a lot faster than trading the H4 chart. However, it’s good to keep in mind the trend of the H4 chart, even if you’re trading the H1.
Sadly I can’t post a link to more information 