Main page Site news

Multi-frame analysis of charts in trading: how to analyze charts and trade on multiple time frames

Multi-frame analysis of charts in trading: how to analyze charts and trade on multiple time frames

Multiframe chart analysis is a “science” that allows you to analyze the same asset on several time frames simultaneously. What is it for? To fully understand the market situation.

Many traders (including me) really like to sit on one time frame and look at only one chart. In general, this does not cause any serious problems, especially if all transactions are opened for up to 30 minutes. I opened the M1 chart, found strong level of support and resistance , opened a deal and wait for profit. And what’s the fun in analyzing several time frames of one asset?!

It is clear that everything depends on the experience of the trader and his trading strategy - many (almost all) trading systems are designed for a specific time frame, which means there is no point or desire to switch between timeframes. And yet, multiframe analysis is a useful thing.

Let's take EUR/USD - a very popular asset that is traded by all (or almost all) traders. On the H1 time frame (1 hour) we see an upward trend:

uptrend on H1

And on M1 (1 minute) we have a sideways movement formed after a sharp drop in price:

sideways price movement on M1

And where should we expect a breakout of the consolidation zone? If down, how long will the fall last? Most likely, it will reach the trend line, and then the price will go up. If the breakout goes up, then why? Because, despite the M1 chart, we are now in an upward trend.

- Wait, what other trend line?!
- This trend line, dear friend:

trend line on M5

And you sit and think what is going on here and why some line there, located who knows where (far) from the current value can “pull” the price, and that it is from this line that you should expect a price reversal upward.
< br> Here it is, multi-frame analysis of charts in all its glory - we looked at higher time frames to determine the general trend, and on lower time frames we looked at everything “under a microscope” to open a delicate transaction.

The best time frame of price charts for trading and making money

The best time frame for trading is different for everyone, as are their tastes. It seems that everyone eats the same dumplings, but some are delighted with them, and others, once again, reminded themselves why they don’t like them. It’s the same in trading – there are a lot of questions about the best time frames, but there is no universal answer and there never will be.

Everything should come down to income. Do you manage to trade with comfort and understanding of the situation, while at the same time becoming a profit? Great! This is the time frame you need. But what if you are a novice trader and have just gained experience in pressing buttons to open trades? There is no knowledge in technical analysis, but something multi... remote... frame causes fear, misunderstanding and despair - what to do in such a situation?

Here are a few questions to ask yourself:
  • How much time am I willing to spend on trading (market analysis)?
  • How many trades do I want to open per day to gradually gain experience?
And all novice traders immediately answer: “A million transactions in 3-4 hours!” When can I take my billion?!” This is wrong, but this is exactly what many people do - they set aside several hours for “trading” and open hundreds of trades during this time (10-40 per price change, which they proudly call a signal). And I’m talking about such people because I was once like that myself - there is no benefit at all from such an approach.

The correct answers to the questions above will be:
  • I am willing to spend several hours a day analyzing markets. This is necessary so that the trader does not trade in a tired state.
  • Number of transactions per day – 3-10 (depending on the market situation)
An older time frame – M15 or M30 – will fit these parameters, and trades will be opened for 1-4 hours. The older the time frame, the easier it is to trade on it, and with adequate risks, even after incorrect forecasts you won’t be able to lose much (because there will be few transactions). I found several signals, opened trades and sit and look at the charts - it’s useful and arouses genuine interest. Always curious how exactly the deal will close:
  • Will the price go far from the opening level?
  • How is the price formed and why is it formed this way?
  • Real-time price movement - what information can I get from my observations?
The usual observation of price movement, supported by the interest of open transactions, has a very good effect on the trader’s experience. And if you open a deal, for example, on M30 with an expiration time of a couple of hours, and then switch to M1, you will get some action - too many different price fluctuations will definitely not let you get bored.

And you don’t need to look at other traders! For example, I am a very lazy person and “hardly” allocate an hour a day for trading. Of course, I want to spend this hour with maximum benefit and trade on M1 charts with a closing time of 3-5 minutes. But this is me – a person who has been familiar with trading since 2011! I can afford it, and I already have the necessary experience. You shouldn’t overestimate your strength, so trades for 15 minutes or more are your habitat for the near future. Don’t forget that risks have not been canceled!

But the process of opening transactions for the same 15 minutes can be made convenient and comfortable. Nobody forbids you to launch the MT4 terminal (Meta Trader 4) and open charts of one asset with time frames M1, M15, M30, H1:

four charts of one asset

And here we see the full picture of the market, even if it differs from each other (but this is even to our advantage):
  • We have consolidation on M1
  • M15 indicates a long side channel
  • M30 indicates that the price, having been in one flat pattern, broke through it upward and formed a new flat pattern
  • H1 tells us about an upward trend
How to use all this in trading? For example, set support and resistance levels and wait for the price to approach this level:

multiframe analysis

Our main level is set on the M15 time frame, and it is also confirmed on higher time frames. We look at M1 - wait for the price to actually drop to this level and open a trade up:
  • Charts M15 and M30 indicate the lower boundary of the current sideways trend
  • The general trend (according to H1) is upward
  • The chart on M1, for the last time, fell off the level for more than an hour
The entry is completely justified and with a high probability the transaction will close in the black.

Long-term time frames for trading

Long-term time frames are monthly, weekly and daily time frames. Personally, I see them only as an auxiliary function, and only if trading on the H1 or H4 time frames.

On the other hand, having set support and resistance levels on such charts, you can notice one interesting detail - strong reversal models of technical analysis, which are very profitable to use in trading:

head and shoulders at daily chart levels

The disadvantages of long-term time frames are that not all brokers allow you to open trades at the end of the week or for a couple of days, but if you are interested in this opportunity, I can recommend the broker IQ Option.

Medium-term time frames for trading

Medium-term time frames are time frames H1 and H4 (hourly time frames). They are great for determining the overall market trend for intraday trading:

medium term time frames

On such time frames it is convenient to make forecasts for the end of the day. If we talk about brokers that allow you to trade like this, I can recommend Intrade Bar.

Short-term time frames in trading

Short-term time frames in trading - time frames from M1 to H1. As a rule, these time frames are the most popular, as they allow making forecasts for a fairly short period of time. For these time frames, our website contains a huge number of trading strategies and trading systems.

short term time frames

Advantages of trading on short-term time frames:
  • Lots of trading signals
  • Quickly receive trading results
  • Trading “under a microscope” - the ability to open more accurate trades
There are also disadvantages to such trading - trading noise. The transaction may be affected by minor price movements, which will not be noticeable when trading on higher time frames.

If we talk about brokers, then this is still the same Intrade Bar and Binarium. You can also add Pocket Option here, but it is better to delay transactions for at least 5 minutes due to its peculiarities quote provider.

Different time frames for trading - why are they needed and what are the benefits of them

Why even look at different time frames and why are they needed in trading? Let's understand it with a clear example.

Let’s take the same long-suffering asset EUR/USD on the M30 time frame:

price reversal and upward trend on M30

On the chart, a downward trend is replaced by an uptrend. By the way, the moment of trend change is Double Bottom figure ( reversal pattern of technical chart analysis). Based on this chart, we can make only one assumption - the upward trend will continue! Is it really?

end of an uptrend

The upward trend ended with the “Triple Top” figure - the figure is not entirely obvious, but all the peaks abut the resistance zone, after which the price reversal occurred. The price rolled back to a local minimum, at which a “Double Bottom” formed - did a flat pattern begin to form? The support level is strong, so it is logical to expect a price increase.


So, wait, where is the upward movement? Why does the downward trend continue if it should have hit a strong support level?! And the answer is very simple, if you look at it from the “right angle”:

two peaks on H4

On the H4 time frame, this situation no longer seems strange - a double top has formed after an uptrend, but how is a “Double Top” traded? Let me remind you:
  • A horizontal support level is drawn through the depression formed between two peaks
  • We wait for the breakdown of this level and open a bearish trade
Those. we had to wait for the breakdown of this level, since the market itself spoke about it, forming a reversal pattern. There was no question of any side channel or upward movement, but we did not know this, looking at the M30 time frame - the situation there seemed different. For example, I’ll show you what the same situation looks like, but on a daily chart:

two tops on the daily chart

Here the letter “M” (double top) looks even more clearly and there could be no doubt - the next few days there will be a decrease in price, which, in fact, happened. If we look at the chart further, a “Head and Shoulders” pattern has formed there, which also indicated a long downward trend, but we would not have seen this on the M30 time frame - the scale is not the same!

head and shoulders on the daily chart

A whole bunch of mistakes out of the blue, if you don’t do just one thing - look at the market on higher time frames. Senior time frames may not be used directly for trading, but as an auxiliary tool they are required.

So, before you start trading, you should look at the global situation of the asset - what if a “Double Top” has formed there, and you are going to open up from the support level?!

Practice of using multi-frame analysis in trading

I hope you have already realized the beauty of multi-frame chart analysis:
  • Older time frames indicate the global situation
  • Junior TFs show the situation “under a microscope” and allow you to find a more accurate entry point
Let's now look at a practical example of trading across multiple time frames. First we need to understand the global picture:

practice of multiframe analysis

In this case, on H1 (hourly chart) there is an upward trend; we build a trend line through local minima. The price came close to our support level, but did not touch it. Should we consider this situation to open a trade up or should we wait for a better signal? Let's move on to M30 and see what happens there:

M30 and Bollinger Bands

We apply the Bollinger Bands indicator and see that the price “pierced” the lower border - it was in the oversold zone. Let's switch to time frame M15:

M15 and Pinocchio candle

We see two interesting points:
  • The red candle closed BEYOND the border of the Bollinger Bands, and the next candle began to form outside the channel
  • The last candle formed at the very bottom of a local downward impulse. There is empty space on the left, and the candle has a small body and a long shadow below - this is Pinocchio or Pinocchio! (reversal model)
The combination of these factors clearly indicates an upward price reversal - why not take advantage?!

continuation of the uptrend

As expected, the trend continued, and we made the correct forecast based on multi-frame chart analysis.

Three best time frames for chart analysis

If we talk about combinations of time frames for multi-frame analysis, then traders have long noticed combinations that best allow them to understand the situation on the market and make the right decision. Let me remind you:
  • Higher time frames are needed to understand the global picture
  • Average TFs allow you to assess the situation more accurately and see the “nuances”
  • Low time frames are needed to find the exact point of opening a trade
So, traders most often use the following combinations of three time frames:
  • M1, M5, M30
  • M1, M5, M15
  • M5, M30, H4
  • M15, M30, H1
  • M15, H1, H4
  • H1, H4, D1
  • H4, D1, W1
Of course, different traders have different preferences, so it is up to you to decide for yourself which chart combinations will be more informative for you.

Multiframe analysis: summary

Multiframe analysis is an additional tool for a trader, which saves him from many mistakes of “higher time frames”, and also allows him to more accurately determine the entry point on lower time frames.

Should I use this type of additional analysis or not? Rather yes than no! There is definitely no harm from it, but there is some benefit - a carriage and a small cart! But analyzing several time frames at once is very unprofitable in terms of time and effort - trading on several different assets disappears immediately, because You can’t keep track of everything.

On the other hand, no one canceled pending transactions (for example, broker Pocket Option has such) - I analyzed the market, placed trades that would work later, and went to “torment” another asset. There would be a desire to do all this, but there will always be ways to make money.
Reviews and comments
Total comments: 0