Timeframe and trends - Intresting observation

[adler]

Hello Friends
I am always intrested to find out everyones opinion on timeframes.

What makes a Trend, higher timeframes or lower timeframes.

Meaning
We do analysis on say 1 hour/4hour which points the direction as DOWN and then scalp on 5 mins shorting, we find that there is no momentum up wards and then wait more for gain, suddenly 5 mins picks up something from somewhere and breaks previous trends and we think it it fake.
But then again 5 mins breaks more resistances and shows signs of changing Trends, eventually beats 15 mins and 30 mins and blows out our analysis to bin and then creates a new trend.

Now in this 5 mins has created a new 1 hour and 4 hour.

then we say lower time frames creates trends.

But on the contrary some say higher time frames are to be used for analysis and we should be entering on lower timeframes .

Sounds a bit contrary. What are you thaughts on this.

Many times I win on Analysis using HTF and then enter on LTF but at times I loose quite a lot when LTF becomes suddenly strong from no where and take out HTFs

Appreciate your comments

[lori]

hi adler, what u wrote is so true. can really be confusing when one time frame says one thing and another says something else!!:rolleyes:

i cant speak for anyone but me of course, but this is what i watch for on the lower time frames, lets say if the higher one says to short....
if the lower time says 'long' (its conflicting w the higher frame), basically thats just a wait and see. for me, thats the hardest part of trading, the discipline to wait. sometimes i dont and then i kick myself later! maybe its not quite as risky to get in IF the market has hit an SK level and u know it will bounce there and ur indicator is headed up, looking good, and this lower time frame is making higher highs and higher lows. also make sure to draw a little trend line on that lower time frame and be ready to jump out quick like if it crosses ur line or indicator starts turning or going flat. make sure u have a closer stop and closer price target. set ur own rules and stick to them!
maybe that helps? good luck to u! lori

[rsi]

Your problem seems to be that you are unable to trade in the lower timeframe using higher timeframe.

First of all, be sure about the trend in the higher timeframe. See whether it is up or down. For the sake of discussion here I am taking up uptrend only. Reverse whatever I have typed here for trading in downtrend.

If you see that trend is up in a higher timeframe say hourly chart, i.e. bars are making higher highs and higher lows, then go to the lower time frame chart say 5 minute chart.

What are going to look in a lower timeframe chart? It is not uptrend, but the downtrend. i.e. trend which is against the higher timeframe chart. Why? to take position. In what direction? In the direction of the trend in higher timeframe chart.

When are you going to enter in to the trade? When the trend reverses in the lower timeframe chart. In this case when the downtrend reverses in to an uptrend in 5 minute chart. What are you going to do? You are going to enter long. Why? You are aligning yourself in harmony with the trend in the higher timeframe. Why are you going to do that? Because you know that it takes lot of effort to reverse trend in a higher timeframe rather than lower timeframe.

But keep in mind a few things. These are

1. Selection of time frames (both higher and lower). Select the one which suits your trading style.

2. Higher timeframe must be at least 5 times higher than the lower timeframe. For example 5 Minute - 30 Minute - 4 hours (this is not an ideal example- But to give an idea)

3. See whether the trend is maturing in higher timeframe. Otherwise even if you enter in the direction of higher timeframe trend (on a lower timeframe chart), all in all probability you will be stopped out.

Does this post help you?
Please give your feedback here
Regards

[uktrader2009]

Hi rsi

Im new here so you will have to be patient with me.

I have read your post and it makes perfect sense until you get to the end and you say " 3. See whether the trend is maturing in higher timeframe. Otherwise even if you enter in the direction of higher timeframe trend (on a lower timeframe chart), all in all probability you will be stopped out."

Could you explain it further please? :)
How do you know if it is maturing?..what do you use to identify this?

Kind regards
Uk Trader

[toyogo00]

Hi UK Trader,

Just to let you know that RSI'reply was in Jun 08.

Since you are new here, FibMaster is the host of this forum. We use Fibonancci method to determine the potential support/resistance and use multiple timeframe with TRSI indicator to determine the trend. See here:
http://www.fibmarkets.com/videoseminar/


Could you explain it further please? :)
How do you know if it is maturing?..what do you use to identify this?


You can use Fib study/trendline to determine whether the trend is maturing or going for the next retracement. (the recent USDJPY movement is a very good example).

Regards,
Toyogo

[uktrader2009]

Thanks for the reply Toyogo...yes thats what i use to see how it is maturing just was intrested to see how others did it.

Kind regards
Uktrader

[seeploxy73]

Ive been looking at those divergences myself. If you look back in time youll see that often but not always divergences like these end with the equity markets following the bonds.