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A common way of employing multiple time frame analysis is to use a longer-term chart to analyze the trend or general sentiment in the pair, and the shorter-term chart to enter into the trade. After the trader has determined the trend, and in the above chart – the trend is decidedly to the down-side (this is determined from the successive lower-lows and lower-highs), the shorter term chart can be investigated so that the trader can look for an opportunity to enter.
In this case, the trader would be looking to sell as the Daily chart exhibited a strong down-trend. Traders can look at this as an opportunity to sell the strong trend seen on the Daily, at a relatively high price (as evidenced on the 4-hour chart).
From the table above, we can see that traders wanting to enter trades on the hourly chart can properly employ multiple time frame analysis by using the 4 hour chart to analyze trends.
So, the first step for the trader is they want to identify the trends; and once again, for the trader using the hourly chart to enter trades the 4 hour chart can provide trend analysis. After the trader gets comfortable with trend analysis on the 4 hour chart, they can go down to the hourly to begin looking for trade entries.


In the chart above, you can see the numerous opportunities that our trader would have had to sell the currency pair based on stochastics.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.Learn forex trading with a free practice account and trading charts from FXCM. For this reasons, it’s important for the trader to plan the time frames they want to trade as they build their strategies. After dialing in on the 4-hour chart, the trader would notice that a portion of the downtrend had been recently given back as price went up. Each daily candle has approximately 1440 one-minute candles, so when I look at the one-minute chart – I am often only seeing what would constitute, at max, one candle on the daily chart.
So, if a trader is looking to enter on the hourly chart, the 4-hour chart can be used for grading the trend. Our trader pulls up a 4 hour chart and notices that price is, and has been below the 200 period Simple Moving Average; so our trader would only want to be looking at sell opportunities (at least until price went above the 200 on the hourly, in which they would begin looking for long positions).


And because the trend was down on the 4 hour chart, our trader is only looking at potential sell positions. Surely, not every sell position would have worked out profitably for the trader; but that is an impossible goal, as completely avoiding losses is inconceivable.
It would be haphazard to read trends on the daily and attempt to place trades on the one-minute chart due to this disconnect. If a trader wanted to enter on the 15 minute chart, the hourly chart can be used for reading sentiment.



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25.07.2015 | Author: admin



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