SCAN THE MONTHLY , WEEKLY & DAILY FOR CONTEXT

Introduction to Higher Timeframe Analysis

When trading, analyzing the Monthly, Weekly, and Daily timeframes provides a broader market perspective and helps identify major trends, key levels, and context. These higher timeframes allow traders to filter out low-probability movements that might occur in smaller timeframes like 4H, 1H, or lower.

By understanding the market’s context through these timeframes, you can align your trades with the dominant trend, identify reversal zones, and avoid unnecessary losses caused by random market fluctuations.

Steps for Contextual Analysis

1. Start with the Monthly Timeframe:
   • Look for clear trends or key price levels (support/resistance).
   • If no clear context is visible (e.g., choppy price action or no dominant trend), move to the Weekly timeframe.
2. Analyze the Weekly Timeframe:
   • Look for patterns like breakouts, retracements, or reversal zones.
   • If a trend or structure is clear on the Weekly, validate it in the 4H timeframe for entries. If not, proceed to the Daily timeframe.
3. Examine the Daily Timeframe:
   • Focus on specific patterns, pullbacks, or confirmation of the Weekly context.
   • If no context is present in the Daily timeframe, skip that asset or move to another pair.

Trade Setup Idea

Scenario: Confirming a Weekly Zone on 4H

1. Identify a Weekly support or resistance zone where price shows rejection or consolidation (as marked in the image with the green highlight).
2. Drop down to the 4H timeframe and look for:
   • Bullish or bearish candlestick patterns (e.g., engulfing, pin bars).
   • Breakout and retest of key levels aligned with the Weekly zone.
3. Plan your entry:
   • Enter on the confirmation of price action at the zone.
   • Set stop-loss below/above the Weekly zone for protection.
   • Target a risk-reward ratio of at least 2:1 based on the next higher timeframe’s key level.

Example:

• If the Weekly zone is a support, and the 4H shows a bullish engulfing candle after a retest, consider entering long.
• Conversely, if it’s a resistance, and the 4H shows a bearish rejection pattern, enter short.

Why This Works

This multi-timeframe approach ensures your trades align with the dominant market structure, reducing the chances of being caught in false breakouts or counter-trend moves.