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Momentum Trading – Using Multiple Time Frame

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Multiple Time Frame Momentum Trading
Trading ending of working day charts to get swing traders is often very best way to free up manufactured and still get involved in the significant moves.

Around Forex, it is usually a minimal difficult as this is the 24 an hour market but expert in Foreign currency where volatility dries right up. If you will be swing trading Foreign currency, think with entering a person’s positions along at the New You are able to session nearby.

You may need to edit a person’s candlestick ending time (if possible) to undertake a snapshot how they working day played outside.

Remember that the market does basically 3 things:

  1. Price mean reverts – pulls back from the dominant swing
  2. Consolidates – stops putting in the price action trending patterns
  3. Moves with momentum                                                                                                                                                                                                                                                                                                                                                                         If you’re trading pullbacks with an end associated with day perform, it is rather easy to understand if price action confirms how the pullback, at least at that time, is total and price is actually resuming trend. Even a good inside day time pattern because indicated with this graphic can ensure you get involved within the resumption associated with trend.


Trading Consolidated Breakouts

Even the finish of day time candlestick can demonstrate the breakout associated with consolidation and when that breakout offers some strength into it. This will allow you to simply enter having a market purchase or in this instance you may buy cease the a lot of the breakout candlestick.

There are different ways to trade outbreaks from consolidation however would need you to look from smaller time period charts with regard to multiple time period analysis typically.


Trading Momentum Moves Can Be A Problem

Momentum techniques pose a small problem. Too many traders wait to get involved with a price move so when they take a look at momentum, traders quite often buy the actual highs prior to a submit price. Following a multi day time run associated with momentum, it is a secure bet to hold back until there’s a reaction within the opposite path of price.

Nevertheless, if you had been to drop right down to a lower time period for the actual momentum deals, you may place yourself in place to make use of the momentum which comes the following day. You may also be taking benefit of price action which indicates there’s potential with regard to another proceed higher instead of flipping the coin and joining momentum.


This graphic shows two days of price action. On the left is the daily chart and you can see the momentum candlestick that we are interested in. The problem is all we have is the candlestick but really no context.

To trade it would be a coin toss.

Look to the next candlestick and you can see a lower shadow. That lower shadow represents a pullback on the lower time frames.

If you are able to drop down to a lower time frame to look for price action and structure that hints to continued momentum, you may want to do it.

On the right is the inside of the second daily candlestick.

  1. Price had been tracking sideways and we now have a stick below support as well as bulls walked in. This really is called the “spring” or even failure check pattern and it is one of my personal favorite trading performs. This display intent with respect to the buyers and also you could possibly market in or just buy cease the higher. Doing so provides you with a forty pip much better entry than buying the actual close from the previous day time.
  2. Assume you missed the first entry but understood the meaning of the failure test. You may opt to enter here at the basing that is setting up prior to the break of the previous day high.

Either one of these simple entries will help you to take benefit of momentum in addition to a bigger placement size since you know wherever the failing of momentum is actually.

If price breaks or cracks below the actual consolidation especially following the failure check move, you realize that momentum isn’t as powerful as it ought to be for greater probability trading. You might want to stand apart and await better price action.

Higher Probability Momentum Swing Trading

By using this trading method with momentum candlesticks may put chances to your benefit as you’re getting inside the actual candlesticks. Seeing developing price action as well as structure which points in order to continued momentum can permit you to lessen your own losing deals and placement size bigger.

You may still loose whatever the swing trading strategy you utilize but anything we are able to do to place the chances on the side may be worth a chance.

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