Previous Bar vs Current Bar

Discussion in 'Technical Analysis' started by alex.samant, Nov 17, 2007.

  1. Hey everyone,

    Many people are using multiple timeframes. They look for a higher timeframe trend to be up for instance and look for a buy on a shorter timeframe. Shorts are reversed.

    For example, when you apply an 8 EMA on the Weekly chart and when the 8 EMA is up you want to buy off the daily charts when, let's say, price is at 20 MA support and Williams %R is oversold on the dailies. (this is not an actual system. just an example)

    Ok. Everything is fine up until now.

    Let's say it's Tuesday.

    Last week, that closed on Friday, closed bulilsh on the weekly, with the 8 EMA closing bullish (rising).

    Price is at the 20 MA on the Daily, W%R is oversold BUT

    and here is the problem..., on Tuesday, even if the weekly bar is not closed, and will not be closed until 3 days from now, the 8EMA on the weekly chart points down. Temporarily...

    You see, when you look at your setup on a closing basis, the setup is fine. When you look at it, "in the now", it's not fine anymore.

    If you make your decision to go long, even if now, Tuesday, the weekly 8EMA is down (temporarily) you are actually disregarding the last two day's price action, and also you are buying into a position hoping that by Friday the position will work out, or you will have to bail out.

    Instead of being in control, the market is in control of you, at least for another 3 days.

    I honestly reccommend, from my humble experience, that you look at your setup in the now.

    PS: Doing this, you can also be able to reverse a trade lot faster if the conditinons are right.