Multiple time frame analysis is simply the method of looking at the same pair and the same price but on a different time frame base.
Remember, a pair exists on several time frames – the daily, the hourly, the 15-minute, and, even the 1-minute that’s only allowed on the paid tradingview for pro scalpers
When you use a chart, you’ll notice that there are different time frames being provided.
The current chart above is the “1 day” or daily time frame.
When you click on the “1hour”, it will bring out the 1-hour chart. If you click on “ 30minutes”, the candlestick on an 1 hour tf would be multipled by 2 on the 30 minutes tf ,meaning that it takes 1 candlestick on a 1hour timeframe to make 2 candlestick on a 30 minutes timeframe the same way for an hour timeframe but inversely
There is a reason why chart apps offer so many time frames. It’s because there are different market participants in the market.
This means that different crypto traders can have their different opinions on how a pair is trading and both can be completely correct.
Some will be traders who will focus on 10-minute charts while others will focus on the weekly charts.
John may see that BTC/USDT is on a downtrend on the 4-hour chart.
However, Jane trades on the 5-minute chart and sees that the pair just ranging up and down. And they could both be correct!
That’s the magic of multiple frame!!!!!!!
Multiple Time Frame Combinations
Technical traders analyze price charts to attempt to predict price movement. The two primary variables for technical analysis are the time frames considered and the particular technical indicators that a trader chooses to utilize.The technical analysis time frames shown on charts range from one-minute to monthly, or even yearly, time spans. Popular time frames that technical analysts most frequently examine
includes;
- 1-minute, 5-minute, and 30-minute
- 5-minute, 30-minute, and 4-hour
- 15-minute, 1-hour, and 4-hour
- 1-hour, 4-hour, and daily
- 4-hour, daily, and weekly and so on.
The time frame a trader selects to study is typically determined by that individual trader’s personal trading style. Intra-day traders, traders who open and close trading positions within a single trading day, favor analyzing price movement on shorter time frame charts, such as the 5-minute or 15-minute charts.
When you’re trying to decide how much time in between charts, just make sure there is enough difference for the smaller time frame to move back and forth without every move reflecting in the larger time frame. If the time frames are too close, you won’t be able to tell the difference, which would be pretty useless.
Long–Term Time Frame
Equipped with the groundwork for describing multiple time frame analysis, it is now time to apply it to the forex market. With this method of studying charts, it is generally the best policy to start with the long-term time frame and work down to the more granular frequencies.
By looking at the long-term time frame, the dominant trend is established. It is best to remember the most overused adage in trading for this frequency: “The trend is your friend.”
Positions should not be executed on this wide-angled chart, but the trades that are taken should be in the same direction as this frequency’s trend is heading. This doesn’t mean that trades can’t be taken against the larger trend, but that those that are will likely have a lower probability of success and the profit target should be smaller than if it was heading in the direction of the overall trend.
Medium-Term Time Frame
Increasing the granularity of the same chart to the intermediate time frame, smaller moves within the broader trend become visible.
This is the most versatile of the three frequencies because a sense of both the short-term and longer-term time frames can be obtained from this level. As we said above, the expected holding period for an average trade should define this anchor for the time frame range. In fact, this level should be the most frequently followed chart when planning a trade while the trade is on and as the position nears either its profit target or stop loss.
Short-Term Time Frame
Finally, trades should be executed on the short-term time frame. As the smaller fluctuations in price action become clearer, a trader is better able to pick an attractive entry for a position whose direction has already been defined by the higher frequency charts.
Another consideration for this period is that fundamentals once again hold a heavy influence over price action in these charts, although in a very different way than they do for the higher time frame. Fundamental trends are no longer discernible when charts are below a four-hour frequency. Instead, the short-term time frame will respond with increased volatility to those indicators dubbed market moving. The more granular this lower time frame is, the bigger the reaction to economic indicators will seem. Often, these sharp moves last for a very short time and, as such, are sometimes described as noise. However, a trader will often avoid taking poor trades on these temporary imbalances as they monitor the progression of the other time frames.
Putting It All Together
When all three time frames are combined to evaluate a currency pair, a trader will easily improve the odds of success for a trade, regardless of the other rules applied for a strategy. Performing the top-down analysis encourages trading with the larger trend. This alone lowers risk as there is a higher probability that price action will eventually continue on the longer trend. Applying this theory, the confidence level in a trade should be measured by how the time frames line up.
In Conclusion
By taking the time to analyze multiple time frames, traders can greatly increase their odds for a successful trade. Reviewing longer-term charts can help traders to confirm their hypotheses but, more importantly, it can also warn traders of when the separate time frames are in disaccordance.
