Registered: Oct 2006
09-12-12 11:55 PM
This happens a lot of course. Ideally you wait for the different timeframes to line up. I'll explain this with a MACD example.
But first a recommendation regarding multiple TF's:
If you use a (smaller) TF to take your entry signal from, and a (larger) TF to determine the trend - try using a factor of x3, x4 or x5. So as an example: Use the 15min inside the hourly chart, the 5min inside the 15 or 30min, and the 1min inside the 5min. The point I'm trying to make is that going from 10min to daily is a jump that is too big imo.
Attached is the MACD of the eurusd forex pair on a daily chart and a 4 hour chart. The euro is going up for around 1,5 months now. And you can see that the MACD made an upwards cross on the daily graph.
Now if you want to jump into this uptrend by means of the 4 hour chart, you just have to wait until it does exactly the same thing = making an upwards cross. These spots are indicated with the green arrows on the 4H chart.
It happen to be also very large green candles in this example. If you want the confirmation of the cross, you have to wait for the bars to close. This will result in a rather large stop since it are relatively long green bars on the 4H chart. Alternatively, you can enter more agressively since both cases were breakouts of a previous inside bar. This would allow for a smaller stop. (but that's just a PA thingy and not the topic of your question)
If both are showing different things - daily up and 4H going down (as it is on the left side of the 4H graph) then there are a couple of options:
- You want to trade the bigger TF trend, so you just wait until you get your entry signal on the smaller TF to get into the bigger TF trend. You wait until both line up.
- You go short but you know that it is a countertrend trade. You don't expect it to run very far and you remain cautious to grab that entry with the trend.
Later as you get more experienced with this you can use even more TF's and see even more trends on all the different layers. This is not limited to just MACD as the concept works for many indicators.
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