Forex Multiple Time Frames

Forex multiple time frames

Multiple Time Frame Analysis Thorough, Powerful

Multiple time frame analysis is by far the most thorough method of analyzing a currency pair.

Most forex traders generally look at only one time frame. Multiple time frame analysis will provide a more thorough analysis and put all of your trades into perspective.

MTFA is for traders who want to truly understand how the forex market works, and for traders who want to be thorough.

Forex multiple time frames

MTFA will improve your odds and confidence on any forex trade.

Multiple time frame analysis is misunderstood. MTFA is also completely underutilized because it takes more work and most traders are looking for shortcuts. Only a handful of currency traders have mastered MTFA, but the number of people who utilize this market analysis method is slowly growing due to the historical lack of success of forex traders and the dangers of trading with one time frame and standard technical indicators.

 

What is Multiple Time Frame Analysis?

Multiple time frame analysis (MTFA) is the inspection of very basic trend indicators and charts, starting with the largest time frame, and working backwards to the smaller time frames.

MTFA allows the analysis to see how the smaller time frames feed the larger time frames.When the small time frames are in agreement with the larger time frames and trends. you should be able to safely enter the trade with good safety, and be trading in the direction of the larger time frames.

This is the basic principle.

Multiple time frame analysis was originally designed for trading stocks, stock indexes, and commodities.

How to use multiple timeframes to improve your trading entries

In this article we will maintain all of the fundamental principles of MTFA, then adapt, update and improve the method for currency traders.

We will use MTFA to analyze individual currency pairs, and conduct analysis of individual currencies by incorporating parallel and inverse currency pairs to accommodate MTFA for spot forex traders.

This will allow us to determine what currencies are strong and week while keeping all of the original principles of MTFA in place. Then we will add various alert systems like audible price alerts and high quality trade entry management tools like The Forex Heatmap® to intercept movements much easier.

Forex multiple time frames

We will blend the old school rigorous method of time frame analysis with more modern systems for today's forex trader.

Indicator Setup For Multiple Time Frame Analysis

The indicators that traders need for multiple time frame analysis is simple to set up.

You can take some exponential moving averages and set them up for one currency pair in about one minute. Then repeat the process for all 7 pairs in the same currency group, then you are ready to analyze one currency and 7 pairs.

Forex multiple time frames

For example you can set up all 7 of the JPY pairs in one group on your charting platform. Repeat the process for all 8 currencies we track. The full instructions for setting up these simple forex trend indicators and individual currencies are in these links.

The number of time frames is 9 on the Metatrader platform. This is good, but a couple more would be better in the H1 to W1 areas to fill in gaps. Here is what the indicators look like on one of the smaller time frames.

Mechanics of Multiple Time Frame Analysis

With multiple time frame analysis you always start with the largest time frame and "drill down the charts" in reverse order, from largest to smallest.

When inspecting the charts you look for trending pairs up or down, oscillating or ranging pairs, sideways moving pairs in small ranges, or choppy pairs. When reviewing charts for a currency pair also pay attention to support and resistance levels established on each time frame.

How To Use Multi Timeframe Trading To Get Better Trade Entries

If you inspect the charts by individual currency, i.e, all of the JPY pairs together, all of the EUR pairs together, etc, you will be able to start formulating trend based trading plans quickly.

The image you see is of the Metatrader platform, which has 9 time frames.

This is adequate for conducting an analysis, however in a perfect world you might want a few more time frames in between the H1 and D1, if you have another charting platform that allows this.

The first step when conducting multiple time frame analysis on a currency pair is to inspect the four largest time frames, the H4, D1, W1 and MN.

You can do this first on all 28 pairs if you like, so you have a good picture of the overall market trends quickly. The "big picture"

By doing this you will quickly know what currency pairs have established larger trends, then see whether the trending pairs are at the beginning, middle or deep into the trend.

You can record what you see on the four largest time frames on our forex market analysis spreadsheet.

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The spreadsheet will tell help to tell you what currencies are strong, weak or mixed.

What To Look For In The Charts

When conducting a multiple time frame analysis, i.e. "drilling down the charts" there are lots of things to look for as you observe the charts. We will cover many of these items here.
1.

Determine what pairs are trending on the higher time frames, H4 time frame and larger.

2. Determine what pairs are ranging between support and resistance. If a find a ranging currency pair in a wide enough range. Then is is possible to consider it for a trade.
3.

How To Do Multi Timeframe Trading In 3 Simple Steps

Determine what pairs are moving sideways, choppy, or in tight ranges, and determine what the reason is. Then weight the risk of trading or not trading. If no trend exists on a particular currency pair, the smaller time frames will, at some point, build an uptrend or downtrend.

4.

Determine support or resistance breakout points on the smaller time frames on trending pairs. Determine breakout points for non trending pairs also. Determine price targets on any pair considered for trading on the higher time frames.

Breakout points can be monitored with audible price alerts.

5. Determine what individual currencies are consistently strong or weak, or mixed.
6. Determine what currency pairs are early in the trend cycle so you can ride the trend up or down. You can drill down the charts on the 28 currency pairs to seek out the best opportunity.
More things to look for in the charts:
The higher time frames trends and the direction of the major trend always overrule the lower time frames.

Trading Multiple Time Frames In Forex

The prices in the lower time frames tend to respect the energy points (support and resistance levels) of the higher time frames structure. The support and resistance areas in the higher time frame can be validated by the action of lower time frames.

Remember that every time frame has its own structure and is independent of the other time frames.One time frame may appear to be chaotic and have its own structure, then the next time frame frame appears to be smoother cycles and much easier to trade, in this case you would trade the smooth time frame because this is what defines the market condition right now and is easy for the trader to read.

New trends in the smaller time frames enable us to enter the trends in the larger time frames if a currency pair is trending.

How To Use Multi Timeframe Trading To Manage A Trade

Multiple time frame analysis will also quickly determine if a currency pair is not trending on the larger time frames and then verify if the pair is oscillating or ranging between support and resistance on the smaller ones.

If a currency pair is not trending and is oscillating or behaving chaotically and moving sideways, at some point it will begin to start trending again. The new trend trend will always start on the smaller time frames as the pair breaks out of its range and builds the larger trends.

With multiple time frame analysis, the the smaller time frames and trends which feed the larger time frame trends.

MTFA will always let us know whether or not a larger trend cycle is starting or is already established, or might be ending. If a currency pair is deep into its trend or movement, MTFA still works but the risk/reward profile of a new entry changes because the trend might be nearing the end of this move.

But once again MTFA will keep you informed of this. Trading off of one time frame will never give you any of this information, and is much more risky.

Traders are looking for ways to trade with the higher time frames, because they know that they can make more pips. By using multiple time frame analysis, traders will always know what pairs are trending on the large time frames. Scalpers may also fine MTFA to their liking because they can scale in the direction of the major trends if they like.
If a currency pair is in an uptrend on the larger time frames and sells off against the uptrend you can use the smaller time frames to detect this and then subsequently re-enter the larger uptrend when the pair reverses back into the trend.

Trading Multiple Time Frames in FX

This form of trend trading is one of the safest methods available of trading the forex. The currency pair sells off against the primary trend and establishes a relative low and then reverses back up into the trend. This can also be done when a currency pair moves up against a larger downtrend. Multiple time frame analysis facilitates this technique, but if a trader is only looking at one time frame, they would be totally ignorant of this low risk trading opportunity. Multiple time frame analysis completely strips down a currency pair so you have deep knowledge of its behavior.

As you can see from the list above, you can observe a long list of things when drilling down the charts.

To become proficient at multiple time frame analysis, set your expectations at several months, at least, of daily chart analysis to become proficient.

Improving Multiple Time Frame Analysis For The Forex Market

Multiple time frame analysis was originally developed for the analysis of stocks, indexes, and commodities charts.

So forex traders must make some modifications analyzing currency pairs.

A Guide to Multiple Time Frame Analysis

Forex traders must set up their charts by individual currency, for starters. For example, set up all of the EUR pairs side by side so you can see if the EUR is strong or weak.

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Make sure you can also set up price alerts on your charts, to more easily detect breakouts. When the price alerts hit, you can check to see if the small time frames agree with the larger time frames for a possible trade entry.

Forex multiple time frames

These are some great improvements for forex traders. The final improvement is to use tools like The Forex Heatmap® to verify all trade entries.

Using tools like this will add a new dimension of safety to all trades where multiple time frame analysis leads you to a trade.

Here is another example of improving multiple time frame analysis for analyzing a single pair, in this case the USD/CHF pair.

When analyzing the USD/CHF with multiple time frames, you would also need to analyze several USD pairs, and several CHF pairs. So analyze the USD pairs in a group, then analyze the CHF pairs across multiple time frames, to see the impact on the USD/CHF.

What is multiple time frame analysis?

The outcome of the analysis would be much more confidence in the analysis and conclusions on whether or not the USD is strong or weak, or if the CHF is strong or weak. If there is no consistency with the USD pairs, conducting an analysis of of the GBP/CHF, EUR/CHF and AUD/CHF, etc., looking for consistent trends based on CHF strength or weakness, is warranted. Then you would know for sure that the USD/CHF is trending, oscillating and ranging, or choppy and you would also know why.

This exact analysis method can be applied to any currency pair.

Entering Forex Trades With Multiple Time Frame Analysis

Now let's apply multiple time frame analysis to entering a trade by using an example.

If a trader examines the CAD pairs using multiple time frame analysis and they determine that the CAD is weak and the CAD/JPY is starting a new downtrend on the D1 time frame, then they can prepare a trading plan to sell the CAD/JPY. Using the smaller time frames, the trader can determine a short term support breakout point. So the trader can then set an audible price alert on the CAD/JPY.  When the price alert hits, they can check to see if the smaller time frames are trending down to agree with the higher time frames.

This is classic multiple time frame analysis. The Forexearlywarning trading system also has a valuable tool called The Forex Heatmap®, which will tell you if the CAD is weak or the USD is strong in real time, so it helps to confirm any trade entry across 28 pairs.

Another added benefit is that the buy signal is strong on the NZD/CAD, so another trade is also possible.

So now, traders can take classic multiple time frame analysis methods and use audible price alerts, plus tools like the heatmap to make their trade entries rock solid.

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All of this while obeying all of the classic rules of multiple time frame analysis. In this case the smaller time frames plus the heatmap are used to assist with the trade entry into the trends on the higher time frames.

Summary and Conclusions - In this article, we explain how to take multiple time frame analysis and adapt it for forex traders.

Everything you need is here to get started with MTFA and do thorough forex market analysis day after day. We also show traders how to enter trades with MTFA, plus some newer tools for forex traders. The acceptance rate of multiple time frame analysis is slowly growing and the risk of trading from one time frame are slowly being revealed to forex traders who want better analytical methods.We sincerely hope that more forex traders adapt multiple time frame analysis as their primary analytical method of choice.

Forex multiple time frames