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Multi-timeframe analysis

Checking the same instrument on two or three chart intervals so that entries on a small timeframe agree with the larger picture.

A common structure is three charts: a context timeframe for the dominant trend, a signal timeframe where the setup is defined, and an execution timeframe for the entry trigger. A rough rule is a 4x to 6x step between them, for example daily, hourly, 10-minute.

The value is avoiding trades that look perfect on a 1-minute chart while price is sitting directly under daily resistance. Alignment across timeframes is one form of confluence.

The trap is the opposite: adding more charts until at least one of them always supports the trade you wanted anyway. Decide in advance which timeframe has authority and what would invalidate the idea. More screens do not mean more information if you only read the ones that agree with you.

Related: higher-timeframe, lower-timeframe, timeframe, confluence, confirmation-bias

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

One daily candle broken into four six-hour candlesA tall daily candle on the left and the four six-hour candles that make it up on the right, with dashed lines linking the day's open to the first candle and the day's close to the last.ONE DAILY CANDLEFOUR 6-HOUR CANDLEScloseopenhighlow=00:0006:0012:0018:00one dayThe same trading, summed up in one bar or spelled out in four.
How timeframes stack up. A daily candle is not different data, only coarser data: it opens where the first six-hour candle opened, closes where the last one closed, and its wicks reach the highest and lowest prices any of the four touched.

Educational only, not advice. Spotted an error? Post in Site Feedback.