Open trading account 
Keeping a birds eye view on the overall market condition canhelp in taking good trading decisions or sitting on the sidelines when the
expected trend directions are contradicting each other. For todays purpose I
will only illustrate an analysis on 2 time frames: first one a 4h chart and the
second one a 1h chart. Usually experts recommend at least a set of 3 timeframes
but I find that more than 2 can become confusing and we can get into analysis
paralysis as they call it. Now lets get down to the GBP/CAD charts.
First chart is the 4H chart. On this we can se some very beautiful textbook measured moves. The angled lines are all the same size, which coresponds to the first initial leg down. The rectangles are underlining the major tops and bottoms, which combined with the measured move provided very good support and resistence levels that could have been used in advance as areas where the next leg could findits end or just stall for a bit before breaking the consolidation. Either way they offer a good idea on what to expect next.
The second chart is the 1H timeframe which gives a very bearish view of the GBP/CAD pair. If we would have just looked at the last down leg (the one capped by the trendline) we would be inclined to consider shorting as soon as the market rises to retest the trend line and peak a bit above it. This would be a perfectly motivated decision.
However, having the 4H chart in mind and seeing we have just bounced pretty steep off of the expected area of support, and seeing massive volumes on the last significant low (which is higher than the previous one) and the bars that define it very large in spread we would reconsider selling the upper channel line(the trendline made by connecting the highs) into such a strong (and confirmed by the high volume and fast bounce) area of support.
The 4H chart kept us from shorting into very strong support area, and at the mean time suggesting testing the waters with buy with a stop below recent lows. Still the 1H chart suggested we are at a less but still very significant ressistence level making us not take the trade. In this case scenario we would wait for the market to retrace a bit lower and going long as the 4H chart suggests. If we would act like that we would have both timeframes supporting us and offering an entry with a very tight stop.
Things dont always come together so nicely but having a look at a higher timeframe than the one youre trading can save you from entering the trade against major S/R levels that otherwise you wouldnt have seen being zoomed in. Hope you liked this. Let me know if you want more of this kind of posts and any suggestions you have for improving them.
expected trend directions are contradicting each other. For todays purpose I
will only illustrate an analysis on 2 time frames: first one a 4h chart and the
second one a 1h chart. Usually experts recommend at least a set of 3 timeframes
but I find that more than 2 can become confusing and we can get into analysis
paralysis as they call it. Now lets get down to the GBP/CAD charts.
First chart is the 4H chart. On this we can se some very beautiful textbook measured moves. The angled lines are all the same size, which coresponds to the first initial leg down. The rectangles are underlining the major tops and bottoms, which combined with the measured move provided very good support and resistence levels that could have been used in advance as areas where the next leg could findits end or just stall for a bit before breaking the consolidation. Either way they offer a good idea on what to expect next.
The second chart is the 1H timeframe which gives a very bearish view of the GBP/CAD pair. If we would have just looked at the last down leg (the one capped by the trendline) we would be inclined to consider shorting as soon as the market rises to retest the trend line and peak a bit above it. This would be a perfectly motivated decision.
However, having the 4H chart in mind and seeing we have just bounced pretty steep off of the expected area of support, and seeing massive volumes on the last significant low (which is higher than the previous one) and the bars that define it very large in spread we would reconsider selling the upper channel line(the trendline made by connecting the highs) into such a strong (and confirmed by the high volume and fast bounce) area of support.
The 4H chart kept us from shorting into very strong support area, and at the mean time suggesting testing the waters with buy with a stop below recent lows. Still the 1H chart suggested we are at a less but still very significant ressistence level making us not take the trade. In this case scenario we would wait for the market to retrace a bit lower and going long as the 4H chart suggests. If we would act like that we would have both timeframes supporting us and offering an entry with a very tight stop.
Things dont always come together so nicely but having a look at a higher timeframe than the one youre trading can save you from entering the trade against major S/R levels that otherwise you wouldnt have seen being zoomed in. Hope you liked this. Let me know if you want more of this kind of posts and any suggestions you have for improving them.
