Profits? duh. Multi time-frame analysis 2: A trade example
Ok, so I promised I'd make another effort to do more analysis. I am however currently in Taiwan travelling so this will be short.
Here we have another example of how including multiple time-frame analysis in your trading routine can keep you profitable.
Let's go back to 12th November last week on the
CADCHF
(Use the back testing feature on your chart in a separate tab if you'd like to follow along more closely):
As you can see there doesn't appear to be much going on. The Daily chart is looking kind of choppy from the previous couple of weeks, although there does appear to have been a bull run since September with a recent "Golden Cross" of the 50/200 EMAs and price still trading above these dynamic SR levels. At this point then, if you're even thinking of trading this pair, you might be feeling bullish. But what happens if we zoom out to the Weekly chart?
This suddenly becomes a little more interesting. You first notice a wedge pattern forming and additionally weekly deceleration right at the 0.7650-0.7700 SR Zone. What are the EMAs doing? Well the 50EMA (Red) is below the 200 EMA (Blue). So the long term trend is clearly Bearish, and appears to have been for a while. With Weekly Price Action stalling in an important SR Zone, right at the topside of a wedge AND trading between the weekly 50/200 EMAs, you can see the picture is totally different from what were presented on the daily. With all this information and considering the choppy price action on the daily, it is fair to say that the lower time-frames could be presenting us with a prime intraday swing entry opportunity.
It turns out we didn't have to look too far. Here is the 4hr chart just before we set an entry order -
Almost too convenient, right?
Lets breakdown what we're seeing here.
Apart from the obvious Doji/High Test at the 0.7650 SR Level, we are also at the all important 0.618 Fib Retracement level (note below)**. Despite the apparent choppiness on the Daily/Weekly time-frames the 4hr chart is showing a new Bear run, identified cleanly by lower highs and lower lows. If that wasn't already enough confluence for you, price has also rejected the Daily Pivot Resistance Level (R1). For me this was the perfect time to set up an entry. I'll save entry placements for another time but here (www.tradingview.com/x/w20VieoS/) is how I positioned my Entry and Stoploss (SL) levels. As it was an intraday entry that I fully intended to be in, I placed the entry fairly close to where price was trading. A quick note on SL - Some people love to wring as much out of their risk reward ratio as possible by placing their stops quite close to the top of the candle that they are trading off. Sometimes this works, but in my experience not enough to make an otherwise profitable trade... profitable. You'll notice that my SL was placed above the last Swing High on the time-frame I am trading off. If you check out this chart -
You'll see that turned out to be a good choice. Price ranged for another couple of days in the end, and having that "breathing room" allowed me to remain in the trade and eventually reach my profit target at 0.7550, the next significant Daily Support level.
So that's it for multiple time-frame analysis!
I included this form of analysis in EVERY trade decision. Sometimes it can turn you off a trade, sometimes it can confirm one and just sometimes - like here - it can give you opportunities where you thought there were none!
I hope you enjoyed this. Please leave your thoughts and your own styles in the comments below so I too might learn from you!
Regards,
ForexVader
**Fibonacci Levels -
Much like trend lines and SR levels, there can be a fair amount of debate over how these are drawn. I tend to get the best results from using actual close/open prices and not the high/low candle prices. It boils down to preference and experience. But experience says a lot, I am only using mine.
Weekly completed -
Daily completed trade -
Here we have another example of how including multiple time-frame analysis in your trading routine can keep you profitable.
Let's go back to 12th November last week on the
CADCHF
(Use the back testing feature on your chart in a separate tab if you'd like to follow along more closely):
As you can see there doesn't appear to be much going on. The Daily chart is looking kind of choppy from the previous couple of weeks, although there does appear to have been a bull run since September with a recent "Golden Cross" of the 50/200 EMAs and price still trading above these dynamic SR levels. At this point then, if you're even thinking of trading this pair, you might be feeling bullish. But what happens if we zoom out to the Weekly chart?
This suddenly becomes a little more interesting. You first notice a wedge pattern forming and additionally weekly deceleration right at the 0.7650-0.7700 SR Zone. What are the EMAs doing? Well the 50EMA (Red) is below the 200 EMA (Blue). So the long term trend is clearly Bearish, and appears to have been for a while. With Weekly Price Action stalling in an important SR Zone, right at the topside of a wedge AND trading between the weekly 50/200 EMAs, you can see the picture is totally different from what were presented on the daily. With all this information and considering the choppy price action on the daily, it is fair to say that the lower time-frames could be presenting us with a prime intraday swing entry opportunity.
It turns out we didn't have to look too far. Here is the 4hr chart just before we set an entry order -
Almost too convenient, right?
Lets breakdown what we're seeing here.
Apart from the obvious Doji/High Test at the 0.7650 SR Level, we are also at the all important 0.618 Fib Retracement level (note below)**. Despite the apparent choppiness on the Daily/Weekly time-frames the 4hr chart is showing a new Bear run, identified cleanly by lower highs and lower lows. If that wasn't already enough confluence for you, price has also rejected the Daily Pivot Resistance Level (R1). For me this was the perfect time to set up an entry. I'll save entry placements for another time but here (www.tradingview.com/x/w20VieoS/) is how I positioned my Entry and Stoploss (SL) levels. As it was an intraday entry that I fully intended to be in, I placed the entry fairly close to where price was trading. A quick note on SL - Some people love to wring as much out of their risk reward ratio as possible by placing their stops quite close to the top of the candle that they are trading off. Sometimes this works, but in my experience not enough to make an otherwise profitable trade... profitable. You'll notice that my SL was placed above the last Swing High on the time-frame I am trading off. If you check out this chart -
You'll see that turned out to be a good choice. Price ranged for another couple of days in the end, and having that "breathing room" allowed me to remain in the trade and eventually reach my profit target at 0.7550, the next significant Daily Support level.
So that's it for multiple time-frame analysis!
I included this form of analysis in EVERY trade decision. Sometimes it can turn you off a trade, sometimes it can confirm one and just sometimes - like here - it can give you opportunities where you thought there were none!
I hope you enjoyed this. Please leave your thoughts and your own styles in the comments below so I too might learn from you!
Regards,
ForexVader
**Fibonacci Levels -
Much like trend lines and SR levels, there can be a fair amount of debate over how these are drawn. I tend to get the best results from using actual close/open prices and not the high/low candle prices. It boils down to preference and experience. But experience says a lot, I am only using mine.
Weekly completed -
Daily completed trade -
Comment:
Some people might want proof I entered this trade. I can tell you that I did also enter it using the paper trading feature of TV however when I take a snapshot of the image the entry and exit arrows disappear and I don't know why this is... If someone knows how I can change this or maybe a better way of sharing the image then let me know and I'll include this. Thanks!