TRADING PURE PRICE ACTION WITH A LONG TIME FRAME PERSPECTIVE

It is very important to understand the larger context of the market as you trade. This can be done by analyzing the larger time frames as you go down to the smaller time frames. Trades in direction of trend always perform much better than trades against the trend.It is easier and takes little or no effort to swim with the stream flow than to swim against it.

Let me explain it with an example below;

NZDJPY TECHNICAL ANALYSIS

The major trend on the larger weekly and monthly time frames is down after a strong reaction off resistance zone marked R but now it is reacting to a major weekly and monthly support zone marked S evidenced by alot of overlaps on these larger timeframes. But such reaction gives give good swing trading moves on the lower time frames like the daily and the 4-hourly.

Trading on the daily chart is now done within larger blue channel shown below marked A,B formed as the price reacts to the larger monthly support zone. Since the major trend is down, even within the channel there will always be a bearish bias, i;e the down swings within the channel will be stronger than the up swings. Within the blue A,B channel, price has formed another small channel marked X,Y.  Close above X can lead to retest of A and close below Y can lead to retest of B. Price close beyond A or B can lead to larger movements on weekly timeframe

Since the daily trend is now running in the small purple channel marked X,Y, trading on the lower time frames like 4-hour, hourly, 30 minutes is done within this small channel until the daily candle confirms break out of the X,Y channel.