Using multiple time frame analysis in forex

What is Forex Time Frame Analysis?

 

Time frame analysis in trading means the way you look at your charts when trying to decide.

You can use time frame analysis for any currency pair, but mainly it’s used with the majors (EUR/USD, GBP/USD, AUD/USD and USD/CHF). The most common way of using time frames in forex is to use one chart that shows all the prices from the past; this chart is called “the ” or ‘main’ timeframe.

Then we have smaller time frames like 4 hours, 1 hour and 30 minutes where we zoom in on the bigger picture (the main chart). We can get an idea about what happened before and see what is happening in the bigger picture.

Timeframes used when analyzing the forex markets

1 Minute (M1)

The smallest time frame you can use in trading, this one shows all the price movements during a minute and gives us an idea of what will happen in larger time frames like M5 and M15. It’s also used sometimes to place trades because it provides detailed information about market sentiment and direction.

5 Minutes (M5) 

This time frame consists of 5 minutes worth of price movement; it’s based on 240 (24 x 10) data points which mean that each candle represents approximately M15 (240 / 3). We use this timeframe to get an idea of how strong or weak the current market direction is

15 Minutes (M15)

This timeframe is based on 1440 data points (240 x 6); each candle represents approximately 1 hour. We use it as a main timeframe and to enter trades

1 Hour (H1)

This timeframe is based on 86,400 data points (1440 x 60); each candle represents approximately 4 hours. It’s used as a main timeframe and to enter trades

4 Hours (H4)

This time frame consists of 17,280 data points (86,400 / 5); each candle represents approximately one day. It’s used as a main timeframe and to enter trades

Daily (D1)

The largest time frame you can use in trading, each candle represents the price movement during one whole day. This time frame consists of 604,800 data points (17,280 x 30)

Monthly (MN1)

All the candles in this time frame represent 30 days each. There are approximately 208,000 data points (604,800 / 2). It’s mostly used to apply fundamental analysis and to identify long-term trends.

Price Action analyses where prices are currently trading and what type of market sentiment drives these prices by looking at chart patterns such as support & resistance, trendlines and candlesticks.

For example, if we have a down trending channel with resistance at 1.3000 on a daily time frame and M15 shows that support from solid buying pressure is at 1.2950, then we can expect that price to bounce from this support and move higher up to retest resistance at 1.3000.

The use of multiple time frames in forex helps us better understand where the market is heading by analyzing the past, current, and future price action on different timeframes.

We can make well-informed trading decisions and increase our chances of profitability in the Forex market.

Advantages

One of the most significant advantages of using multiple time frame analysis in forex is that it can help you get a better overall picture of the market. By looking at charts in different time frames, you can see how other market parts react to price changes.

This can help you identify potential trading opportunities and make more informed trading decisions.

Another advantage of using multiple time frame analysis is that it can help you stay disciplined with your trading. When looking at charts in different time frames, it’s easier to see when a trade is not working out and to exit the trade accordingly.

This can help you to avoid losing money on bad trades.

Finally, using multiple time frame analyses can help you become a better trader overall.

By learning to read charts in different time frames, you can better understand how the market works and how to trade it successfully. This can help you to become more profitable in the long run.