Method
Top-down analysis
Read the larger timeframes first, then move down to find the entry.
Widely taught. The Exchange can test it on public price history and will say what it finds.
No published test of multi-timeframe top-down analysis was found. One arithmetic reason to prefer larger timeframes: a fixed spread is a smaller share of a larger stop.
What it is
Start with weekly and daily for the main levels and trend, then four-hour for the current flow, then a lower timeframe for the trigger. A larger timeframe frames what a smaller one means.
What it suggests
A signal against a strong higher-timeframe level is a weaker reason than the same signal with it.
How to check it
Write the timeframes and the question asked on each in the plan, and answer them before every trade.
Common mistakes
- Skipping the top of the sequence when in a hurry.
Related lessons
Written in our own words. Education only, not financial advice.