Can a dual/multiple time frame approach be helpful in Technical Analysis ? How can one incorporate more than one TF in their analysis ? My definition of a TF ( Time Frame ) refers to either a daily or weekly, in this example, not the Dow Theory TF analysis.
A real life example here may be, how to read a road map ? Melways as it is called here in Melbourne. Do they still exist ? I guess they do still ( in hard copy I am talking about), but for how long? If I was to plan a trip relying on Melways , I would rely on the pages which shows the greater Melbourne, my current location as well as the main roads that I should be looking at taking, before I start my trip. That in TA may be the next higher time frame up.
Lets look at this by analysing the ALU chart. I start with WEEKLY. The two relevant drawings on this chart are the two SOLID LINES ( SUPPORT & RESISTANCE lines similar to a trendline ) drawn in PINK. All the rest are drawn on my DAILY CHART. I don’t want to delete those, but to say that, they make no sense on this weekly chart. Ignore them for now, until the next daily chart at the bottom.
These two ( SUPPORT/RESISTANCE LINES) tell me when the instrument is overbought and oversold within the broader context of it’s up trend. Price action below or hugging the support line means oversold.Above the resistance line overbought. All this info., is on the weekly chart below.
ONLY TWO THAT MATTERS BELOW ( Weekly chart) are the SOLID PINK SUPPORT/RESISTANCE LINES and the PRICE ACTION in relation to these two.
For refinement, as to when the correction may start or end, we may rely on our DAILY CHART. The two solid lines, would still be there and we know what they are. Treat them as MAJOR SUPPORT/RESISTANCE if and when price action hugs them, touches them. Also remember they reverse their role.
All the DASHED trend/support/resistance lines on this daily chart, are for the analysis used in the daily. As well as yellow/green boxes.
How would Mr Richard Wyckoff interpret this following daily chart of ALU, without having to rely on the indicators of today ?
He may tell us to look at the SOLID PINK SUPPORT LINE, which is from our weekly TF and to look at the reaction as soon as, it was hugged. He may also tell us to look at the violation of the RESISTANCE LINE of the DOWN TRENDING CHANNEL on DAILY with dashed Blue resistance line ( a corrective pattern so far anyway). Look at the candle highlighted with GREEN. Look at the volume at the bottom for the last couple of days. Also look at where we found resistance at the last candle.
But in summary he may have told us that the downtrend/corrective pattern of late has stopped, at least for now. It has not reversed , not yet anyway.
In order to learn, WATCHLIST,STALK & ANALYSE like Mr Richard Wyckoff did.
If anything does not make sense, please let me know.
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