First of all, I have received a lot of emails from readers asking me for the BTB November performance report. As I went for a long vacation to Europe, I did not trade and therefore did not have any performance report for posting.
However I am back to trading in Dec and will definitely post the December report on the 1st of Jan.
In today forex faq, we have a question from one of our fellow readers asking me the below question
Which TF dictates the trend, H1 is down whilst H4 is up and D1 is ranging
Just in case some of you guys here do not understand his question. What he is saying is that when the hourly chart shows a DOWN Trend but the 4 Hourly chart show a UP TREND while the Daily chart shows no trend.
This can be pretty confusing for new traders and therefore I will like to share with you guys how I do my trend analysis.
What I use is what I call the TOP DOWN ANALYSIS
I will plot a 200 EMA on my Daily, 4 Hourly, Hourly and 15 minutes chart
After that, I will check the trend on the Daily chart first follow by the 4 hourly chart and then the hourly chart follow by the 15 minutes chart
Situation 1: If you have more time frames showing the same trend, then the overall trend will be that trend
Situation 2: If you have 2 time frames showing up trend and 2 time frames showing down trend, then you need to analyze the weightage of the trend.
Do note that the higher time frame has a higher weightage of the trend
If you have the daily chart showing down trend, 4 hourly showing up trend, hourly showing down trend and the 15 minutes showing up trend
The down trend on the daily chart will override the up trend on the 4 hourly chart while the down trend on the hourly chart will override the up trend on the 15 minutes chart
Therefore the overall trend will be DOWN
Below is another example on the EURUSD today
Daily Chart: Up Trend
4 Hourly Chart: No Trend
Hourly Chart: Down Trend
15 minutes Chart: Down Trend
Therefore the overall current trend is DOWN for the EURUSD since majority of the time frame is showing down trend.
I hope that I have answered your question and do feel free to email me at [email protected] if you have any question