Multiple Timeframe Analysis is the type of analysis of multiple charts at the same time for you to properly determine price behavior and environment. Traders using multi-frame analysis can use 2.3 to 4 timeframes with each frame doing a different task.

Basically, with 3 timeframes, you will divide it into:

  • High Timeframe: This framework helps Traders analyze the big picture, the price environment, the overall structure of the market.
  • Trading Timeframe: Trader's main framework used to analyze the market, including factors: trend, future price movement, and finding new trading opportunities.
  • Low Timeframe: This framework helps Traders find early entry points or find exact exit points, helping to optimize the risk-reward ratio.
For example, in the EURUSD chart below, instead of drawing multiple support lines on the H4 chart (which is the main trading chart), you will use a larger time frame (chart daily) to find support.

Next, you use the Trading timeframe to identify a trend like bullish, bearish, or sideways and separate these concepts from support resistance lines. The price can move freely within the area supported by the resistance lines on the big timeframe, and the main time frame is where you focus your analysis.

For example, in the EURUSD chart, position 1 is the bullish trend until the trend reverses at resistance. The market does not reverse immediately but moves sideways before confirming that it has turned down at position 2. the downtrend cannot fall deeply and again turns sideways and the market just returns to the downtrend at position 3.

Finally, the low timeframe is where you find your entry or exit points, and sometimes you will identify changes in market strength (discussed in another section).

For example, after you have identified the area where you want to enter (based on your expectation of the future direction of the price), you will turn on a low timeframe chart to find early entry points.

Using this chart example, you identify the area at the first arrow position as an area of potential price reversal (due to touching resistance lines). The second area is on the sideway chart but has the potential for prices to reverse in a downward direction (due to price pressure moving from before).

After turning on the chart on a low timeframe (I used the H1 frame), you can see that familiar price patterns such as Spike and Top (a spike then the price peak) appear in this frame and the Triple Top pattern ( 3 vertices). Entering orders this way, you will trade earlier and have a better risk-reward ratio than just using a key time frame to enter an order. That is not to mention using a key time frame can cause you to enter orders later and risk-reward much less.

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