Being mindful of what is going on, on multiple timeframes at the same time is crucial when trading, as this enables one to consider the flows on the higher timeframes relative to the smaller timeframes, because this is where the major flows will be visible. In this article I will present a utility we have created that helps traders do just that, view multiple timeframes on a single chart, without having to change timeframes.
When performing a multiple timeframe analysis, one might take a glance at the weekly chart and use this information when clicking down to the medium-term timeframe and finally the short-term, or trading timeframe, where entries will typically be placed and trades monitored. If you know where the trend is headed on the weekly chart then you have a pretty good idea where the trend will eventually go on the smaller timeframe. This gives one a bias, which is golden.
How can this be accomplished?
What if it was possible to X-ray a chart in a way that enabled one to look inside each candle in order to see the activity within them? This was the question I asked myself a while ago and which resulted in the Pipnotic X-Ray, a tool that shows us what’s going on inside multiple candles from multiple timeframes at the same time.
Don’t understand? Here is an example.
As is clear in the above image, and if you’re familiar with Pipnotic colouring, you’ll notice that we are able to view four-hour, daily and weekly candles on the same chart. We can also see where the supply resides on this chart, which is at the top of the 5th orange candle from the right. This is also clear, as there is a very classic departure at the top of the daily candle within the same candle, which is one of the clues we look for when identify supply and demand.
How can we use this information?
If you’re familiar with supply and demand trading, then you’re likely acquainted with the concept of well-formed supply and demand as well as qualification rules of some sort such as supply or demand capable of consuming opposing supply or demand. Once you understand these concepts then looking at a chart similar to the one presented about will likely make much sense to you.
What we’re looking for, is a visual representation of strength, which one can see when large-bodied candles are printed on a price chart. As you can clearly see in the chart example above, the concept of strength is very apparent during the same period of time on the weekly chart, and during the same price window. This is what we are looking for when identifying historically attractive price windows.
Entries, stops and targets
Entries should be placed at the beginning of buy and sell zones and stops above the area of supply or below the area of demand. Targets are to be placed at an obvious area of opposing supply or demand (have a look at the following presentation for additional information on this) that may potentially present a challenge when price gets close to it. Try to keep the process simple – and if it’s not, then move on to something that looks clearer. Clarity is your friend when doing this, and if there is a lack thereof then it’s best to move onto something else with clarity.
Let’s have another look, this time at the AUDCAD on the one-minute chart, which will display the five, fifteen and thirty-minute timeframes all on the same chart:
Again, here we can see a nice departure on the biggest of the three timeframes, the thirty-minute, five bars from the right – and within that bar, a visual representation of strength in the form of a long fifteen-minute candle. I think you’re probably beginning to see how powerful this concept is.
I won’t spend more time on the notion of X-raying price bars, as I think we have covered two great examples that nicely illustrate the power of the X-ray. Thanks for taking the time to read this article and please feel free to share this article and the PDF file above to anyone who may find it useful.
Happy new year!