Multi-Time Frame Analysis
Think of Price Action in terms of waves. There are some waves which are large, and some are small. If a large wave is flowing towards the shore, and a small wave is going away from the shore, what will happen to the small wave when it meets the large
wave? Obviously, it will start flowing back towards the shore, in line with the large wave. There is no small wave capable to turning the course of the large wave, atleast in the now.
Now think of Candles in terms of waves. If the Weekly Candle (large wave) is Up, and Daily
Candle (medium wave) is Down, and Hourly Candle (smaller wave) is Down, will the Price go down. It may, and be enough to keep prices down and turn the Weekly Candle also down. The odds of this happening though are less. Therefore in Multi-Time Frame analysis one should trade
with the larger Trend. If the Weekly Candle is Down, and Daily Candle is Down, then, when the Hourly Candle goes Down, one can take a Short trade.
Vica-versa, when the Weekly Candle is Up, and Daily Candle is Up, then, when the Hourly Candle also goes Up, one may take a
Long trade. We are looking for all time-frames to be in alignment, before taking the trade. This results in two clear benefits.
First is the number of trades of the system will reduce. This will mean we are missing certain signals, yes. It will catch lesser number of moves