Learn How to Trade Multiple Time Frame Analysis

10 มิ.ย. 2023

Hey traders,

🔝Top-Down analysis is one of the most efficient ways to analyze & trade different financial markets. In this post, we will discuss the time frames to watch and the main steps to go through to execute a Top-Down trading strategy properly.

Being a Top-Down trader your task is to assess the global market perspective and identify the zones, the areas from where it will be relatively safe for you to trade it following the trend or catching the reversals.

➖Weekly time frame shows you the price action during the last couple of years. It unveils the major zones of supply and demand and indicates the long-term direction of the market.
Your task is to spot these zones and underline them.
The strongest market moves most of the time initiate from these zones.

At the same time, you must remember that on a weekly time frame the market is extremely slow. Being beyond the key zones 90% of the time, it takes many weeks, even months for the market to reach them.

➖Once you completed a weekly time frame analysis,
the next on your radar is a daily time frame.
Daily time frame shows you 1-year-long price action.
It indicates a mid-term sentiment.
And again, here your task is to simply identify the market trend and underline major key levels.

*It is highly recommendable to apply different colors for highlighting weekly/daily levels.

Completing weekly/daily time frame analysis, your task is to set the alerts on at least two closest support/resistance clusters. You must patiently wait for the moment when the price reaches one of them.
Once the underlined key level is reached, you start the analysis of intraday time frames.

➖The intraday time frames on focus are 4H/1H.
Your task here is to spot the price action/ candlestick patterns.
With such formations, the market unveils its reaction to the key level that it is approaching.
You are looking for a pattern that confirms the strength of the level.
Spotting the pattern you are looking for a trigger to open a trading position. Most of the time it is a breakout of a trend line or a horizontal neckline.
The breakout confirms the willingness of buyers/sellers to buy/sell from the underlined support/resistance . Only then a trading position is opened.


Here is the example how I analyzed and traded Gold using multiple time frame analysis:

1. I have analyzed weekly chart and spotted a key horizontal resistance

2. On a daily time frame, I found a rising trend line that matched perfectly with the underlined weekly structure.

3. Testing the confluence zone based on a trend line and a horizontal resistance, the price formed a double top pattern on 4H time frame. Its neckline breakout was my confirmation to open a short positing.
Entry point was a retest of a broken neckline.
The market dropped sharply, producing a very nice profit.

Of course, in practice, Top-Down analysis is very complex and many things and concepts must be learned in order to apply that strategy properly. Follow the steps described in this post, learn to identify key levels and recognize the price action patterns and you will see how efficient this strategy is.

Do you apply a Top-Down trading strategy?

Let me know, traders, what do you want to learn in the next educational post?