HIGHER & LOWER TIME FRAMES - THE DYNAMIC YOU WONT SEE ANYWHERE ELSE
THE DYNAMIC RELATIONSHIP
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.
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
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Please ignore earlier Mail, Copy Given below article while posting.
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