Timeframes and top-down analysis

The same market can be in an uptrend on the daily chart and a downtrend on the 15-minute chart. Both are true. The skill is knowing which one you are trading.

Top-down analysis in three steps

1. Higher timeframe (daily or weekly): direction. What is the main trend? Where are the big support and resistance zones?
2. Middle timeframe (4-hour or 1-hour): setup. Is price pulling back into a level the higher timeframe cares about?
3. Lower timeframe (15-minute or 5-minute): entry. Wait for a trigger, such as a break of the small trend or a rejection candle, and place a tight stop.

A simple rule of thumb

Use timeframes about four to six times apart: daily → 4-hour → 1-hour, or 4-hour → 1-hour → 15-minute. Trade in the direction of the higher one. Most losing trades come from shorting a 5-minute dip in the middle of a strong daily uptrend.

On Supercharts you can open four charts side by side (layout button) with the same symbol on different timeframes, which is the fastest way to practise this.