HIGHER & LOWER TIME FRAMES - THE DYNAMIC YOU WONT SEE ANYWHERE ELSE

THE DYNAMIC RELATIONSHIP


At the start of a trend on the Daily and 4 Hour Charts, one will notice a unique relationship between these charts that is also replicated on other time frames. For every candle seen on a Larger Time Frame, there is a setup and signal on a corresponding Lower Time Frame that led to that candle. Then, in a recursive manner, every candle on the Larger Time Frame that is going to lead to a trend, produces another setup and signal on the Lower Time Frame in response to that candle. To make this even more complicated, the time it takes for the Lower Time Frame to respond to that signal is approximately the same as the Larger Time Frame.

This relationship takes place between all Higher Time Frames and Lower Time Frames that are directly linked to each other, from the Monthly Chart down to the 1 Minute Chart. Here are the pairs of time frames that are directly linked to each other that follow this pattern of setups and signals.




LARGER & LOWER TIME FRAMES DIRECTLY LINKED



The graph below shows this relationship between the Daily and 4H Charts. This took place on the AUD NZD on April 30 this year with the start of a Bear Crown formation.

DAILY CHART
















The signal for the Right Tip of the formation was provided with a break of a Counter Trend Line.  It was part of a Trend Line break at the Resistance of a newly formed Pennant. The 4 Hour Chart below shows the setup that led to that signal.


4 HOUR CHART















Following this Daily Signal, the 4H Chart provided a follow-up signal in the form of a Bearish U-turn (Evening Star) after 24 hours (four 4 H candles preceded the Bear Signal).


4 HOUR CHART



You will see this relationship played out on most trends on these time frames across the currency market. This dynamic allows the trader to anticipate a setup that can be traded after the Higher Time Frame has provided the signal. It also helps in anticipating False Signals as well. If the signal given on the Higher Time Frame will not lead to a successful trend, then the Lower Time Frame will not produce a follow-up signal. This can happen when the market has hit a major price point that will lead to a reversal.

The other useful aspect of these signals and setups is that one can determine the type of setup to expect on the Lower Time Frame. If these are in sync between both time frames, it gives added confirmation that the trade will be successful. So how do we know which setups to expect on the Lower Time Frames so that we do not enter prematurely to then get stopped out?




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Duane Shepherd 
(M.Sc. Economics, B.Sc. Management and Economics)
Currency Analyst/Trader
Contact: shepherdduane@gmail.com
Twitter: @WorldWide876
Facebook: DRFXTRADING 

Comments

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  3. Drawing trend lines is one of the few easy techniques that really WORK. Prices respect a trend line, or break through it resulting in a massive move. Drawing good trend lines is the MOST REWARDING skill.

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    http://www.forextrendy.com?kdhfhs93874

    ReplyDelete
  4. Do you think that to dramatically improve your success rate you have to read tons of thick books, buy expensive software and spend countless hours of learning more about Forex?
    What I'm going to share with you is something very EASY to use and very POWERFUL at the same time.
    Let me give you an EXAMPLE:
    Imagine you trade a system that makes 50% winning trades, but another 50% are losing trades. If you increase your odds of winning by only 20%, that would make 70% winning trades and 30% losing trades.
    Well, HOW TO accomplish that?
    Just pick the best trending pair at the current time and simply follow the trend! I have found ONE INCREDIBLE TOOL that continuously scans the Forex market and picks the most reliable trending pairs for you.
    ==> http://www.forextrendy.com?ljsjhd8374h
    By taking signals in the direction of a strong trend you would REDUCE UNNECESSARY LOSSES and increase the odds of winning. You need to know "how well" the market is trending to avoid very short-term trends.
    STOP hunting the market for every potential trade. Pick only the best trending pairs and time frames and DO NOT take any trading signals in the choppy market (unless you know exactly what you are doing).

    Successful traders keep it simple and this is the way how the pros made fortunes in the markets - by trading less and making more.
    To increase the profitability of any system or robot you are currently using, check out this easy and powerful ultimate solution:
    ==> http://www.forextrendy.com?ljsjhd8374h

    ReplyDelete
  5. Drawing trend lines is one of the few easy techniques that really WORK. Prices respect a trend line, or break through it resulting in a massive move. Drawing good trend lines is the MOST REWARDING skill.

    The problem is, as you may have already experienced, too many false breakouts. You see trend lines everywhere, however not all trend lines should be considered. You have to distinguish between STRONG and WEAK trend lines.

    One good guideline is that a strong trend line should have AT LEAST THREE touching points. Trend lines with more than four touching points are MONSTER trend lines and you should be always prepared for the massive breakout!

    This sophisticated software automatically draws only the strongest trend lines and recognizes the most reliable chart patterns formed by trend lines...

    http://www.forextrendy.com?kdhfhs93874

    Chart patterns such as "Triangles, Flags and Wedges" are price formations that will provide you with consistent profits.

    Before the age of computing power, the professionals used to analyze every single chart to search for chart patterns. This kind of analysis was very time consuming, but it was worth it. Now it's time to use powerful dedicated computers that will do the job for you:

    http://www.forextrendy.com?kdhfhs93874

    ReplyDelete

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