The Only Technical Analysis Book You Will Ever Need by Brian Hale

Author:Brian Hale [Hale, Brian]
Language: eng
Format: epub
Published: 2023-06-12T05:00:00+00:00

Now, let’s look at the one-hour chart time frame:

Obviously, you can see that US Oil is now showing an uptrend structure. So the question is, which chart is right?

Is US Oil in an uptrend or a downtrend?

Well, here comes the real deal: successful traders using technical analysis trade with a bias toward the long-term trend. It has had a long time to establish itself, and it will take a large surge of momentum to change its direction.

Therefore, you should always be aware of trends, and support and resistance levels across multiple time frames. This will help you identify how strong various trends and levels of support and resistance are. Ultimately, using multiple time frames on your charts enables you to expand your technical analysis.

However, I recommend that you analyze securities with at least three different time frames, starting from a higher time frame to a lower time frame, before deciding whether to go long or short. Usually, I would name these time frames as shown below:

Market trend chart: This is the longer-term chart, usually the monthly, weekly, or daily time frame. As the name suggests, the market trend chart helps you identify the predominant trend you should be looking to trade with. If the security in the trend chart is trending upward, you should be looking to place buy orders. But if the trend chart is trending downward, you should be looking to sell the security.

Behavior/signal chart: This is the time frame you use or trade in, usually the four-hour or one-hour time frame. The signal chart is your most important chart. It provides the trading signals that tell you when to look for buying and selling opportunities based on your trading strategy.

Entry/timing chart: This is the shorter-term chart where you usually decide to enter a trade. The timing chart helps you know when to enter and exit a trade. Every point counts when you are a trader, so the more accurately you can identify your entry and exit points, the more money you can keep in your account. For this chart, you want to be looking at the thirty-minute, fifteen-minute, or five-minute time frame.

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