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  • Writer's pictureVasily Trader

Top-5 tips for Top-Down Multiple Time Frame Analysis. Secrets After 9 Years of Trading

Updated: 1 day ago

multiple time frame analysis secrets

I am trading multiple time frame analysis for many years. After reviewing trading ideas from various traders on Tradingview, I noticed that many traders are applying that incorrectly

In this article, I will share with you 5 essential tips, that will help you improve your multiple time frame analysis and top-down trading.

The Order of Analysis Matters

Multiple time frame analysis is also called top-down analysis for a reason. When you trade with that, you should strictly start your analysis with higher time frames and then dive lower, investigating shorter-term time frames.

Unfortunately, most of the traders do the opposite. They start from a lower time frame and finish on a higher one.

how to trade multiple time frames

Above are 3 time frames of EURGBP pair: daily, 4h, 1h.

To execute multiple time frames analysis properly, start with a daily, then check a 4h and only then the hourly time frame.

Limit the Number of Time Frames

Executing multiple time frame analysis, many traders analyse a lot of time frames.

how to trade top-down analysis

They may start from a weekly and finish on 5 minute time frame, going through 5-8 time frames.

Remember that is it completely wrong.

For execution of a multiple time frame analysis, it is more than enough to analyse 3 or even 2 time frames. Adding more time frames will overwhelm your analysis and make it too complex.

Analyse Particular Time Frames

Your multiple time frame analysis should be consistent and rule-based. It means that you should strictly define the time frames that you analyse.

For example, for day trading, my main trading time frames are daily, 4h, 1h. I consistently analyse ONLY these trading time frames and I look for day trades only analysing this combination of time frames.

Higher is the Time Frame, Stronger the Signal in Provides

Trading with multiple time frame analysis, very often you will encounter controversial signals: you may see a very bullish pattern on a daily and a very bearish confirmation on 30 minutes time frame.

Always remember that the higher time frames confirmations are always stronger, and their accuracy is always higher.

top-down analysis examples

Above there are 2 patterns:

a head and shoulders pattern on a daily time frame with a confirmed neckline breakout, and an inverted head and shoulders pattern on a 4h time frame with a confirmed neckline breakout.

2 patterns give 2 controversial signals:

the pattern on a daily is very bullish and the pattern on a 4h is very bearish.

The signal on a daily time frame will be always stronger,

so it is reasonable to be on a bearish side here.

top-down analysis examples forex

You can see that the price dropped after a retest of a neckline of a head and shoulders on a daily, completely neglecting a bullish pattern on a 4H.

Each Time Frame Should Have Its Purpose

You should analyse any particular time frame for a reason.

You should know exactly what you are looking for there and what is the purpose of your analysis.

For example, for day trading, I analyse 3 time frames.

On a daily, I analyse the market trend and key levels.

On a 4H time frame, I analyse candlesticks.

On an hourly time frame, I look for a price action pattern as a confirmation.

multiple time frame analysis trading examples

On GBPAUD on a daily, I see a test of a key horizontal resistance.

On a 4H time frame, the price formed a doji candle.

On an hourly, I spotted a double top, giving me a bearish confirmation.

These trading tips will increase the accuracy of your multiple time frame analysis. Study them carefully and adopt them in your trading.


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