Multi-Timeframe Analysis

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Whether you are a day trader focusing on short term trades (using 1min, 5min, 15min charts), a Swing Trader focusing on a 2 to 5-day timeframe or a long-term 'Position' Trader you need to have the FULL PICTURE. Most successful traders will look at longer-term charts to get this balanced picture, before focusing on their preferred timeframe. Generally working there way down before they take their positions. It sounds complicated, but in essence it is quite simple as our example shows. It's basically looking at the same chart, but in different timeframes to confirm the trend is going with the trader. In our Euro/US Dollar Forex cross pair chart example you may find that the 5-minute chart has a strong down trend, which may also be confirmed by an hourly chart. Is this something you may trade? In general traders are told to trade with the trend. However a daily chart may have an extremely strong up trend as the Euro/Dollar charts show.


In this case you’d think twice about placing a short trade (A short position is when a trader borrows shares from a broker and sells them on the open market. The investor must eventually return the borrowed stock by buying it back from the open market, hoping the price will fall). Usually traders and investors use 3 timeframes in their analysis. This search for greater perspective will help in successful trading.

Multi-Timeframe Analysis

Traders will look at the multi-timeframe not only to confirm the trend, but to pick entry and exit points for their trades.  A trader may look at a weekly chart to gauge the trend over the last couple of years.  If he/she finds the trend in bullish (up) and if technical indicators, price action and/or tools (we go on to study these) suggest the trend will continue on a bullish run a trader may want to enter the market. The trader will then drill down to a daily chart (Any further down than an hourly chart and the weekly trend will be pretty much useless - see "So, Which Time Frames work Best" Below) to pick the time to enter the market.  If on a daily chart the security looks overvalued, based on technical indicators, then he/she will wait until these technical indicators suggest the security is under valued before entering the trade. This means the trade get's off on the right footing to start with.

Which Time Frames?

One of the most common questions from new traders is ‘What time frame works best?’ After all, there are quite a few different time frames we can work with, aren’t there? Unfortunately, there isn’t an easy or direct answer to this question – as any time frame you choose is going to leave something to be desired. That ‘something’ is the fact that all time frames are lagging; only showing us past prices… which may not be indicative of future prices. But we can still choose time frames conducive to our goals, and build an analytical approach so that we know the optimal time to employ our strategy and enter trades based on what it is that we want to get out of the market. And if market conditions do change, risk and money management can help prevent these reversals from completely draining the trader’s account.

Use Time Frames that Match Your Goals

Often times, traders can get conflicting views of a currency pair by examining different time frames. While the daily might be showing an up-trend, the hourly can be showing a down-trend. But which way should we trade it? This can provide conflicting signals and counter-productive unrest in the trader’s mind as they are attempting to line up trades. For this reasons, it’s important for the trader to plan the time frames they want to trade as they build their strategies. In many cases, traders can benefit from using multiple time frames; in an effort to incorporate as much information as possible into their analysis. Incorporating a longer time frame will allow the trader to see a ‘bigger picture’ of the currency pair so that they may get an idea of ‘general trends,’ or the sentiment that may exist; while the shorter time frame chart can be used for plotting the actual trade. This leads into a very popular permutation of technical analysis in which traders incorporate multiple time frames into their approach.

Multiple Time Frame Analysis

By utilizing multiple time frames in their analysis, traders are getting multiple vantage points into the currency pair(s) that they are looking to trade. 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. Below are two time frames commonly used by ‘swing traders,’ with the goal of keeping the trade open for anywhere from a few hours to a few weeks. First, the trader will analyze the general trend in the pair by looking at the Daily Chart, and noticing that price is in the process of making ‘lower-lows,’ and ‘lower-highs.’ 



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. The ‘swing-trader’ will often use the 4-hour chart to look for entries after grading the trend based on the Daily.



In this case, the trader would be looking to sell as the Daily chart exhibited a strong down-trend. 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. 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).

So, Which Time Frames do Work Best (with each other?)

When using multiple time frames, it’s important to remember that not every time frame will work together accordingly. If I’m using the daily chart to read trends, but the one-minute chart to enter trades; there is a large element of disconnect between the two time frames. 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. It would be haphazard to read trends on the daily and attempt to place trades on the one-minute chart due to this disconnect. We suggest a ratio of 1:4 to 1:6 between the trend and the entry chart when employing multiple time frame analysis. So, if a trader is looking to enter on the hourly chart, the 4-hour chart can be used for grading the trend. If a trader wanted to enter on the 15 minute chart, the hourly chart can be used for reading sentiment. Below is a table with some common time frames for analysis.

So Which Time Frame Do I Use to Trade?

It is very common for new and experienced traders alike to get caught up in the confusion of which time frames should be watched and paired together and this comes from the fact that there is never a “best” or “most appropriate” time frame what will be suitable for all cases. 

Two General Approaches

From all of this, there are two general arguments that are made with respect to which time frames should be most closely watched and considered when new position strategies are put in place. Some traders tend to believe in the most common charting time frames (hourly, daily & Weekly), because this will allow them to have an idea of the same price levels and pattern structures that are being watched by a majority of the market.

There are, however, those with a contrarian view who suggest that this is the totally wrong approach, as these time frames will prevent you from anticipating the next market move ahead of the majority. These traders might, for example, choose to use a 3-minute chart, rather than a 5-minute chart. This rationale has less to do with watching a shorter time frame than it does with watching a different time frame, and allowing you to focus on patterns differently as they begin to emerge.

Charting Limitations

Unfortunately, a direct answer to the question is difficult to construct as any chart will have some limitations given the fact that we can never include all necessary information. So, how can these limitations be reduced? And how can we use multiple time frames in conjunction with each other so that trading goals can be accomplished on a consistent basis?

In many cases, using different time frames together will create conflicting signals. For example, Bullish patterns might emerge on a shorter-term while a Bearish trend is shown on the longer-term time frames or vice versa. In these cases, it can be difficult to know which signal is more valid, and which should be trusted when determining trading bias. It is for these reasons that it is important for traders to plan for which time frames will be used as trading strategies are developing.

Using Multiple Charts at a Time

As a general rule, trend and momentum traders will trade with the long term bias and will benefit from using more than one time frame at a time, as this will give a broader perspective of what is happening in the near and long term. Additional information is never a bad thing (unless it becomes too confusing) so traders should keep in mind that multiple time frames are preferable but too many time frames can give a “muddied” picture.

Longer-term time frames will give traders a larger sense of where the majority of price momentum is headed. But since past price movements will not necessarily tell you what will happen next, an addition of a shorter-term perspective will usually provide a highly valuable of when entry opportunities are presenting themselves within that larger trend.

This implementation of multiple vantage points can prove to be one of the best ways of spotting trade signals as the new patterns emerge. An additional benefit can be seen when the shorter-term time frame gives you a specific price level that enables you to maximize risk to reward ratios. This is generally a requirement for traders looking to implement “swing” trading strategies, but can be applied to any strategy as long as the information that is being given does not become a distraction and confuse more than inform.

Written by Richard Cox


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Whether you are a day trader focusing on short term trades (using 1min, 5min, 15min charts), a Swing Trader focusing on a 2 to 5-day timeframe or a long-term 'Position' Trader you need to have the FULL PICTURE. Most successful traders will look at longer-term charts to get this balanced picture, before focusing on their preferred timeframe. Generally working there way down before they take their positions. It sounds complicated, but in essence it is quite simple as our example shows. It's basically looking at the same chart, but in different timeframes to confirm the trend is going with the trader. In our Euro/US Dollar Forex cross pair chart example you may find that the 5-minute chart has a strong down trend, which may also be confirmed by an hourly chart. Is this something you may trade? In general traders are told to trade with the trend. However a daily chart may have an extremely strong up trend as the Euro/Dollar charts show.


In this case you’d think twice about placing a short trade (A short position is when a trader borrows shares from a broker and sells them on the open market. The investor must eventually return the borrowed stock by buying it back from the open market, hoping the price will fall). Usually traders and investors use 3 timeframes in their analysis. This search for greater perspective will help in successful trading.

Multi-Timeframe Analysis

Traders will look at the multi-timeframe not only to confirm the trend, but to pick entry and exit points for their trades.  A trader may look at a weekly chart to gauge the trend over the last couple of years.  If he/she finds the trend in bullish (up) and if technical indicators, price action and/or tools (we go on to study these) suggest the trend will continue on a bullish run a trader may want to enter the market. The trader will then drill down to a daily chart (Any further down than an hourly chart and the weekly trend will be pretty much useless - see "So, Which Time Frames work Best" Below) to pick the time to enter the market.  If on a daily chart the security looks overvalued, based on technical indicators, then he/she will wait until these technical indicators suggest the security is under valued before entering the trade. This means the trade get's off on the right footing to start with.

Which Time Frames?

One of the most common questions from new traders is ‘What time frame works best?’ After all, there are quite a few different time frames we can work with, aren’t there? Unfortunately, there isn’t an easy or direct answer to this question – as any time frame you choose is going to leave something to be desired. That ‘something’ is the fact that all time frames are lagging; only showing us past prices… which may not be indicative of future prices. But we can still choose time frames conducive to our goals, and build an analytical approach so that we know the optimal time to employ our strategy and enter trades based on what it is that we want to get out of the market. And if market conditions do change, risk and money management can help prevent these reversals from completely draining the trader’s account.

Use Time Frames that Match Your Goals

Often times, traders can get conflicting views of a currency pair by examining different time frames. While the daily might be showing an up-trend, the hourly can be showing a down-trend. But which way should we trade it? This can provide conflicting signals and counter-productive unrest in the trader’s mind as they are attempting to line up trades. For this reasons, it’s important for the trader to plan the time frames they want to trade as they build their strategies. In many cases, traders can benefit from using multiple time frames; in an effort to incorporate as much information as possible into their analysis. Incorporating a longer time frame will allow the trader to see a ‘bigger picture’ of the currency pair so that they may get an idea of ‘general trends,’ or the sentiment that may exist; while the shorter time frame chart can be used for plotting the actual trade. This leads into a very popular permutation of technical analysis in which traders incorporate multiple time frames into their approach.

Multiple Time Frame Analysis

By utilizing multiple time frames in their analysis, traders are getting multiple vantage points into the currency pair(s) that they are looking to trade. 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. Below are two time frames commonly used by ‘swing traders,’ with the goal of keeping the trade open for anywhere from a few hours to a few weeks. First, the trader will analyze the general trend in the pair by looking at the Daily Chart, and noticing that price is in the process of making ‘lower-lows,’ and ‘lower-highs.’ 



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. The ‘swing-trader’ will often use the 4-hour chart to look for entries after grading the trend based on the Daily.



In this case, the trader would be looking to sell as the Daily chart exhibited a strong down-trend. 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. 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).

So, Which Time Frames do Work Best (with each other?)

When using multiple time frames, it’s important to remember that not every time frame will work together accordingly. If I’m using the daily chart to read trends, but the one-minute chart to enter trades; there is a large element of disconnect between the two time frames. 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. It would be haphazard to read trends on the daily and attempt to place trades on the one-minute chart due to this disconnect. We suggest a ratio of 1:4 to 1:6 between the trend and the entry chart when employing multiple time frame analysis. So, if a trader is looking to enter on the hourly chart, the 4-hour chart can be used for grading the trend. If a trader wanted to enter on the 15 minute chart, the hourly chart can be used for reading sentiment. Below is a table with some common time frames for analysis.

So Which Time Frame Do I Use to Trade?

It is very common for new and experienced traders alike to get caught up in the confusion of which time frames should be watched and paired together and this comes from the fact that there is never a “best” or “most appropriate” time frame what will be suitable for all cases. 

Two General Approaches

From all of this, there are two general arguments that are made with respect to which time frames should be most closely watched and considered when new position strategies are put in place. Some traders tend to believe in the most common charting time frames (hourly, daily & Weekly), because this will allow them to have an idea of the same price levels and pattern structures that are being watched by a majority of the market.

There are, however, those with a contrarian view who suggest that this is the totally wrong approach, as these time frames will prevent you from anticipating the next market move ahead of the majority. These traders might, for example, choose to use a 3-minute chart, rather than a 5-minute chart. This rationale has less to do with watching a shorter time frame than it does with watching a different time frame, and allowing you to focus on patterns differently as they begin to emerge.

Charting Limitations

Unfortunately, a direct answer to the question is difficult to construct as any chart will have some limitations given the fact that we can never include all necessary information. So, how can these limitations be reduced? And how can we use multiple time frames in conjunction with each other so that trading goals can be accomplished on a consistent basis?

In many cases, using different time frames together will create conflicting signals. For example, Bullish patterns might emerge on a shorter-term while a Bearish trend is shown on the longer-term time frames or vice versa. In these cases, it can be difficult to know which signal is more valid, and which should be trusted when determining trading bias. It is for these reasons that it is important for traders to plan for which time frames will be used as trading strategies are developing.

Using Multiple Charts at a Time

As a general rule, trend and momentum traders will trade with the long term bias and will benefit from using more than one time frame at a time, as this will give a broader perspective of what is happening in the near and long term. Additional information is never a bad thing (unless it becomes too confusing) so traders should keep in mind that multiple time frames are preferable but too many time frames can give a “muddied” picture.

Longer-term time frames will give traders a larger sense of where the majority of price momentum is headed. But since past price movements will not necessarily tell you what will happen next, an addition of a shorter-term perspective will usually provide a highly valuable of when entry opportunities are presenting themselves within that larger trend.

This implementation of multiple vantage points can prove to be one of the best ways of spotting trade signals as the new patterns emerge. An additional benefit can be seen when the shorter-term time frame gives you a specific price level that enables you to maximize risk to reward ratios. This is generally a requirement for traders looking to implement “swing” trading strategies, but can be applied to any strategy as long as the information that is being given does not become a distraction and confuse more than inform.

Written by Richard Cox


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