Technical Analysis 101 - Part 1.
The longer time frame is more powerful than the shorter time frame. What I mean about this is that usually the price follows the longer time frame than the shorter one.
Yes, there might be a shake off or some violent price action but usually the price follows the pattern of the longer time frame.
You can also use the longer time frame to determine the trend for your shorter time frame. This is useful for people that's day trading or scalping.
Please note that this is not 100% working as trading is a game of probability. Nothing in trading and life is 100% sure. There's always a possibility that the pattern is good but suddenly the price surge/move against your bias because of some macro/socio economic news or some fundamental changes.
See the image below, as you can notice, the 5 minutes time frame chart of #SEIUSDT . Some people specially those that are aware of the RSI - Price divergent pattern might trade this.
But when you look at the 4 hour time frame, you will notice that the price instead is broken down from a consolidation.
Then upon looking at the weekly time frame, you will notice that the price of SEI shows a "double top" pattern then after that. The price try to break up the "double top" pattern but failed to do so.
That's why on my previous post, I am quite confident that the #SEIUSDT is bearish. Usually the failed break out is a bearish signal specially if it happens in a longer time frame.
In conclusion, you should always consider the current people's sentiment before triggering any trade. Don't base your trade solely in one analysis. You can both use technical analysis and fundamental analysis at the same time.
That's all for today. Good luck and Happy hunting!
