Multiple Timeframe Analysis (Multiple Timeframe Analysis) is the type of analysis of multiple charts at the same time for you to properly define the environment and price behavior. 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 break it down into:
  • Large timeframe: This framework helps Traders analyze the overall market, price environment, and overall market structure.
  • Trading timeframe: The main Trader used to analyze the market includes factors: trend, future price movement, and finding new trading opportunities.
  • Low timeframe: This frame helps Traders find early entry points or find exact exit points, helping to optimize the risk-reward ratio.
According to Lance Beggs, the author uses a large timeframe to identify important areas of supportive resistance. This helps to reduce the noise when searching for areas of support resistance in lower timeframes.

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 resistance and support.

Next, you use the Trading timeframe to identify a trend like bullish, bearish, or sideways and separate these concepts from supportive resistance lines. The price can move freely within the area supported by the resistance lines on large timeframes, 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 did not reverse immediately but went sideways before confirming that it turned to a downtrend at position 2, the downtrend could not decrease deeply and continued to turn sideways and the market just returned to the downtrend at position number 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 an early entry point.

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