Multi-Timeframe Analysis (Top-Down)
Before entering a trade, it is necessary to analyze various timeframes to understand the overall trend, see the market sentiment, and determine the entry point.
Just because the price is in an uptrend on the 5-minute timeframe does not mean that this is the overall trend direction. Higher timeframes should carry more weight in your analysis.
For example, you can use the following combination:
- Overall picture timeframe: Daily
- Trading idea timeframe: 4h - 1h (you can stop at these timeframes for making decisions on spot purchases / medium-term trades)
- Entry point timeframe: 15m - 5m (if you are day trading)
