Chapter 2: Multiple Timeframe Analysis (Audio)

Welcome back. In this chapter, we’re going to learn about multiple timeframe analysis — one of the most powerful techniques used by experienced traders.

Multiple timeframe analysis is the process of looking at the same currency pair on different timeframes to get a clearer picture of the market. Why is this useful? Because the market looks different depending on which chart you’re looking at. The trend on the daily chart might be going up, but the trend on the one-hour chart might be going down.

To stay on the right side of the market, we want to trade in the same direction as the larger trend. This is called trading with alignment. When all the timeframes are pointing in the same direction, your trade has a better chance of success.

Now, let’s talk about how to use this in practice.

A top-down analysis starts by looking at the higher timeframes first — like the weekly or daily chart. This shows you the big picture. Where is the market overall? Is it trending? Is it stuck in a range? Is it at a key support or resistance level?

Then you move down to the lower timeframes — like the four-hour, one-hour, or even fifteen-minute charts. These help you find precise entry and exit points, once you already know the direction you want to trade.

Think of it like planning a road trip. First, you look at the map to see the big roads and overall direction. Then, as you get closer to your destination, you zoom in to find the exact streets. Same idea with charts.

Let’s go over a simple rule you can follow:

Use the 3-to-1 rule for timeframes. That means, for every trading decision, look at three charts:

• Your entry chart — the one you use to place trades, maybe 1 hour.
• One higher timeframe — like 4 hours, to check the trend.
• One lower timeframe — maybe 15 minutes, to fine-tune your entry.

This helps you see the big picture, the current momentum, and the exact timing all at once.

Here’s a common mistake traders make: they only look at one chart. This is like trying to read a book through a keyhole. You only see one piece of the puzzle, and you miss the warning signs from higher timeframes.

Now let’s talk about the role of each timeframe:

• The higher timeframe shows the market structure. Where are the key levels of support and resistance? Is price trending or ranging?
• The middle timeframe is your working chart. This is where you analyze price action, patterns, and indicators.
• The lower timeframe gives you the details. It helps with timing — when exactly should you enter or exit?

By combining all three, you trade with confidence. You’re not just guessing — you’re following what the market is doing across the board.

You might be wondering — which timeframes should I use?

Here’s a simple guide:

• If you’re a scalper, try using 5-minute for entry, 15-minute for trend, and 1-hour for market structure.
• If you’re a day trader, maybe use 15-minute for entry, 1-hour for trend, and 4-hour for structure.
• For swing traders, use 1-hour or 4-hour for entries, daily for trends, and weekly for structure.

Remember, the key is consistency. Always use the same timeframes in your routine so your analysis becomes second nature.

Let’s go through a quick example:

Let’s say on the daily chart, EURO – USD is in a strong uptrend. Price is making higher highs and higher lows. That’s your market structure.

Then, on the four-hour chart, you see price has pulled back to a support level. That’s your setup.

On the one-hour chart, you see a bullish candlestick pattern forming. That’s your entry.

This alignment across timeframes tells you the move has strength — and you’re trading with the flow, not against it.

Before we wrap up, here are three tips to remember when using multiple timeframes:

1. Always start with the higher timeframe. It helps avoid trading against the main trend.
2. Only enter when the timeframes agree. Don’t force trades when the charts are out of sync.
3. Be patient. Wait for clean setups — alignment gives you confidence.

Multiple timeframe analysis takes a little extra time, but it gives you much better results. You’ll stop making random trades and start making smarter, more strategic decisions.

In this chapter, we’re going to learn how to understand and use chart patterns in your trading. Chart patterns are shapes that price forms on a chart. They can help you predict what the market might do next.

There are two main types of chart patterns: continuation patterns and reversal patterns.

A continuation pattern means the market will likely keep moving in the same direction. A reversal pattern means the trend might be coming to an end and could go the other way.

Let’s start with continuation patterns.

One of the most common continuation patterns is the flag. A flag forms after a strong move in one direction, called the flagpole. Then, price moves sideways or slightly in the opposite direction, forming the flag. This pause is temporary. When price breaks out of the flag, it often continues in the same direction as before.

Another pattern is the pennant. It’s similar to a flag, but instead of moving sideways, the price starts to form a small triangle. This shows that the market is taking a short break before making its next big move. Just like the flag, once price breaks out of the pennant, it often continues in the same direction.

Rectangles are another type of continuation pattern. A rectangle forms when price moves between the same high and low over a period of time. Buyers and sellers are in balance, and the market is waiting. When price finally breaks out of the rectangle, it usually keeps going in that direction.

Now let’s talk about reversal patterns.

One of the most famous reversal patterns is the double top. This happens when price reaches a high point, falls back, and then tries to go up again — but fails to break the previous high. It creates an ‘M’ shape. When price breaks the low between the two highs, it’s often a signal that the market will go down.

The opposite is the double bottom. Price hits a low, bounces, tries to go lower again — but fails. This creates a ‘W’ shape. If price breaks the high between the two lows, it’s often a signal the market might go up.

Another important pattern is the head and shoulders. This one looks like three peaks: the middle peak is the highest, and the two on the sides are lower. When price breaks below the line that connects the two low points — called the neckline — it can signal a reversal from uptrend to downtrend.

The opposite of this is the inverse head and shoulders. It looks like a valley with a deeper dip in the middle. When price breaks above the neckline, it may mean the trend is changing from down to up.

These patterns work because they reflect how traders behave. After a strong move, the market often takes a pause. Traders are deciding whether to continue in the same direction or reverse. Chart patterns help us read these decisions before they happen.

But patterns don’t always work perfectly. That’s why we use confirmation.

Confirmation means we wait for price to break a key level — like a neckline or a trendline — before we enter a trade. This helps us avoid false signals.

It’s also important to combine chart patterns with other tools — like support and resistance, volume, or multiple timeframes. When these all line up, your trade has a stronger chance of success.

Finally, always remember to manage your risk. Even the best patterns can fail. So use stop-loss orders and never risk more than you can afford to lose.

Learning chart patterns takes time. But the more you study them, the more confident you’ll feel in your trading.