How to Perform Multiple Time-Frame Analysis The Right Way + Examples

Hire one this is Stephen before we get into the course. I'd like to go through the disclaimer. The information presented in this video and all the videos and this course are through wealthy education and are for educational purposes only. Nothing in any of the videos is intended as a recommendation to buy or sell any specific security equity or option now is going into advanced technical analysis and module one. We're talking about support and resistance indicators. In our first video we're going to be talking about in multiple time frame analysis it's not a complicated concept but it's important that you understand it as we'll be using it throughout the course. So in multiple time frame analysis we review two to three different timeframes on our chart as you can see in our graph on the left we may want to look at the daily weekly and monthly chart of a stock before we make a trading decision. The reason we do this is because different time frames can tell us different stories about where our stock is headed whether or not it's a trend or it's not trending. The timeframes should be four to five x minimum apart. What that means is you don't want to look at three different timeframes that are close together or else you'll basically get the same picture if you're looking at a one minute a two minute and a three minute chart. It's really not going to help you out to get a bigger picture. You want to be able to zoom out from your trading timeframe and then to zoom in from your trading time frame as well. For example if you're trading on an hourly basis then you may want to look at a daily chart to get a larger picture of what type of trend the stock is. And then as you get ready to execute a trade you may want to look at a 15 minute chart to see how the stock is performing in a shorter timeframe and then use that 15 minute chart to confirm either your buy or sell signal in your hourly chart which we're using as your main trading timeframe by looking at multiple timeframes you can more precisely time your entry and exit points throughout the videos will be combining multiple timeframes with technical analysis tools and we'll use those tools in multiple timeframes. We may find that different timeframes give us conflicting signals as to whether to go long or short a stock or to not take a position. Again this can be helpful in helping us pinpoint our entry and exit points. So let's look at multiple time frame analysis on a chart and see what that looks like. Let's look at multiple time frame analysis on a chart of Bank of America. If we look at the chart we see that the stock has been trading in a range for several months now the trades up to a high of 33 and then later reaches a high of just over 31. In May goes up to 32 in August. So it's trading in the low 30s at the high end of the range and at the low end of the range I've drawn a line at the 28 level 28 was resistance back in October of 2017 and then became support. He has seen the stock bounced off of the 28 level in July of 18 and here in October of 18 it's trading right at the twenty eight level. So let's say that we want to get long the stock and we're trading it on an hourly basis. So we've identified the range so it's and we believe it's right around a support level on the daily chart. So what we want to do now is look at the hourly chart which is the time frame we'll be using to Trade Bank of America. So we see again it's right around the support level. We can see the stock has trended down to support level which we knew from the daily chart and it's bouncing now we're seeing some dodgy and small bodied candlesticks here. So this is a positive sign on the hourly chart that we're getting some bouncing in the stock. But we also have these negative candlesticks. So right now if you want to trade on an hourly basis and use our 28 level of support then we may want to use this candlestick which has a low this candlestick which has a low of 27 64 combined with this candlestick which also has a low 27 64 so you have a tweezer bottom here as our stock. So if we purchased the stock here at 28 we may want to use that as our stop because if it breaks through that level then it's gone through support and it's gone through the hourly low in the past couple of hours. Now what we want to do is go up here and look at the 15 minute chart and get a little bit closer to where the stock is. We can see our support level at 28. The stock is trading just below it. But on the 15 minute chart we have some positive price action here we have a bullish golfing pattern with a large green candlestick in golfing the red candlestick and the stock has broken above the high of this candlestick which was twenty seven ninety five up to 28:1. So a 15 minute chart we see the stock starting to move up and we may want to actually buy as it breaks back above the support level. Now we can add indicators says look at adding the Mac the and see what that tells us at this level. So at the Mac the we can see we've got a positive divergence. The stock has continued to move down while the Mac D is moving up and now we've crossed to a buy signal in the Mac D as well. But let's back out to our hourly chart again and we see is just about to move to a buy signal and the Mackie here and then let's look again at our daily chart and see what the Mackie is telling us and see here we have the Maquis still trending down it's in very negative territory. So the math is telling us on a daily chart that it may not be a buy just yet. So we can put all of that together and make our decision and it depends on your again on your time frame and what your risk tolerance is. But if you want to go to that hourly chart of Hallward trading then we're coming right up to a buy signal here. So if I were trading this on an hourly basis I would wait for it to cross above that 28 level before making a purchase. So that's how we use multiple time frame analysis and deciding whether or not to take a position in a stock that we're looking to trade or like to thank you for watching this video on multiple time frame analysis. As I said earlier in the video we'll be using multiple time frame analysis in each one of the technical indicators that we're looking at. So you'll get a chance to see multiple time frame analysis and a variety of situations as we go through this course in the next video. We'll be looking at horizontal support and resistance. I look forward to seeing you in the next video.