Are you looking for another piece to the trading puzzle?
Sometimes it’s easy to overlook higher timeframes when trading, but they can hold the key.
In this video we show you how to identify higher timeframe impulses to trade lower timeframe trends.
Watch the video to learn more…
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, we’re going to go over something a little bit different. We’re going to talk about how you can use multiple timeframes to look for trading opportunities and why it’s a good idea to do this.
Essentially in the markets, when we’re looking at the impulses and retracements on trends, you’ll have impulses on higher timeframes and trends within that on lower timeframes.
So let’s say this was the daily that we have here on GBP/USD on the left-hand side, just here, and we’ve drawn this little line where the market is making higher highs and higher lows. Within that, you’d have trends.
If I were to change the color to blue, what we’d see is a slight trend within that four-hour timeframe, and when we get a retracement phase, we’d see a small downtrend.
Potentially there’s just one lower low or two lower lows coming out of that, and then we’d see the transition period, here, where the market then changes trends back into the uptrend and things like that. We then have opportunities in the four-hour timeframe at these areas of support and resistance, where we can then go to a lower timeframe and look for trends within that. You’ll see within these impulses that there’ll be trends like so, and that’s all we’re looking to do on a day-to-day basis.
Now, what I quite like here on the GB Pound at the moment is that we have been in that transition period of being in an impulse move, and if just draw a line from the low to the current high, here, then look from the 13th of November, we can see that the market has been in an uptrend on the four-hour timeframe. So we’ve actually zoomed out a little bit, and if I put a marker on the 13th, which is just here. We can see the last trend that formed in the four-hour market. We can see that the market has been making higher highs, and that’s the transition period here for the market to then start impulsing on the daily timeframe. As soon as I see that, what I match the timeframes up, so we can see that the daily is impulsing to the upside and the four-hour is now trending to the upside. So, then next thing for us to do is to highlight the area of support and resistance where the market is likely to continue to trend from. Now, I like to look at our previous structure highs and lows. So, if I look at this here on GBP/USD now in the four-hour timeframe, I can just grab a rectangle tool and say to myself, if the price comes back into this level on the pullback, I can look for long opportunities in there. We can see that on the 19th – the price pulls back into that four-hour high and the market rallies back to the upside.
If I go look at the 15-minute timeframe on the 19th of November, what do we see forming? The market will come back into that support. So, if I grab a rectangle tool and just draw this, in here, on the 15-minute timeframe, that is where our four-hour support is. What we see is the market goes into an oversold condition and what we’ll do again is to just match the timeframe up. We have the four-hour in trend and we also have the daily impulse moving to the upside. Now, we need to see the 15-minute trend agree with that. We actually get a really nice breakout pattern, in here, where the market pulls back into the level, and we consolidate. What’s really nice about this is that we go into an oversold condition, so the market then breaks out to the upside. This is suggesting to us that we could see some further upside at that point.
So the way I’d look at this is one or two ways, I’d either wait for a pullback into the highs again and look for the long opportunity – making sure my stops are at least 10 pips below that low or look for the market to buy in from there.
What we could do at that point is we can consider on that 132.03-132.93 is a stop-loss order, so it just stays in that move there, and I would look to enter on the bullish candlestick, in here, after the market went into an oversold condition. So, place a stop-loss order on 131.91, or 93. I should say, and then I’ll target the next area of a structure. If I was looking at this, we could look at the potential for the market to come back up into 133.11, which would be all the way up here, or we could look to shoot for daily targets, which would be around the 19th, here. So, we’re looking at around 134 as the target for this particular move on the GB Pound, and the market obviously rallies up quite nicely.
Depending on how you want to view the markets, you can really use multiple timeframes to enable you to pinpoint key areas where you expect the market to turn from and then look for further long opportunities. Again you can see here the price comes back down into that four-hour trend into those four-hour highs. The daily is still impulsing to the upside.
If we go, take a look at the 15-minute timeframe around those points, you can see, that there’s a big spike into that level.
The next day, we get another spike into the level market change cycle, here. So, you could be long in and around this point, with stops below the lows and in profit. At the moment, the market is moving to the upside. What I like to do is analyse the daily chart, look at the daily closes, analyse the daily trend, identify the four-hour trend, and stay on side of that four-hour trend until it changes, then look for 15-minute opportunities on pullbacks.
So that’s a really good way to identify trend trading opportunities using your multiple timeframe analysis.
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