With this Japanese candlestick MT4 Indicator, traders are able to draw greater period Japanese candlesticks on any period chart. When price action on smaller time-frames approaches levels of support and resistance on e.g. hourly, four hourly or daily charts, one can generally expect some kind of manageable reaction. Wouldn’t it be useful if you could display greater period candlesticks without having to leave the chart currently being viewed? Identifying significant levels of support and resistance would certainly be much easier. Let’s have a closer look.
I enjoy watching price action unfold on the one and five minute charts, but I will rarely open a position without first consulting the higher time-frames for significant levels of support and resistance. Many employ a top-down analysis, where analysis begins on a higher time-frame such as the daily, and continues down to the lower time-frames on which trades may be entered. Performing a technical analysis in such a way, ensures that the trader is mindful of significant, key levels, even whilst viewing the one minute chart. When these levels are on the trader’s charts before price reaches them, they have time to plan and prepare for an entry at the most advantageous price possible, should one unfold.
Consider the following 15 minute chart. Where would you draw your levels on this chart? Would you be comfortable trading price action alone of this chart or would you prefer first taking a look at the price action of the greater time-frames?
Using a top-down analysis, let’s begin on the daily or weekly chart and proceed by marking any easily identifiable, significant levels. Clear swing-highs and swing-lows should be drawn on the current chart, as well as other levels that converge with the open, close, high and low levels of candles on greater time-frames. These higher time-frame candle open, close, high and low levels can easily be identified and marked on the current time-frame via the Pipnotic Intra Candles MT4 indicator as illustrated below (please consult the references section for download information):
Once all significant and relevant levels have been marked on the higher time-frame, we can move down to a smaller time-frame and repeat the process. As an example, if we begin our analysis on the daily chart and mark relevant swing-highs, swing-lows, and the open, close, high and low of the weekly candles, we would then continue with the four hour chart and repeat the process. All clear, converging four hour swing-highs, swing-lows and daily candle opens, closes, highs and lows should be marked, this time using a different line thickness to help differentiate between the significance of the levels – the more significant the level, the thicker the line. I also use different colours to help differentiate between the significance of the lines – blue for weekly, black for daily, red for four hourly and white for hourly. This makes it very easy to quickly gauge the importance of a given level, as illustrated below:
And the process continues down on a smaller time-frame:
When the top-down analysis is complete, move back to the higher time-frames and use additional tools such as Fibonacci levels and look for retracements and extensions that converge with the levels identified via the initial analysis. If any such levels are identified, one can generally consider them to be sensitive to price and expect some kind of a manageable reaction.
The following screen-shot illustrates the use of Fibonacci retracements in combination with the levels identified via the top-down analysis:
While buying and selling at levels on the smaller time-frames can provide some profitable positions if managed carefully, doing so at more significant levels greatly increases the likelihood of success, as the bounces are often relative to the swings on the higher time-frames and thus larger and easier to manage. Use the free Pipnotic MT4 indicator, draw the levels, sit on your hands and don’t do anything until price comes to your levels.
As the English phrase extolling the virtue of patience nicely states:
Good things come to those who wait
The same applies to trading.
Try this out with the previous period open and close strategy (see references section) and see how you do. If you have any comments, requests or insights, I’d be pleased to hear from you.
Pipnotic Intra Candles MT4 indicator settings
The following settings can be used to manipulate the behaviour of the MT4 indicator:
- EnableAutoGreaterPeriodCandles: When set to True, the MT4 indicator will draw candlesticks one time-frame greater, on the current chart
- CandlePeriodMultiplier: Draws candles from the period this many time greater than the active chart’s period
- BullishCandle: Specifies the colour of bullish candles
- BearishCandle: Specifies the colour of bearish candles
- CandlePeriod: Candlestick period to draw on current chart. Used when EnableAutoGreaterPeriodCandles is set to False
- CandlesToShow: Number of candlesticks to draw on current chart
The black line above each candlestick signify the given period high and low.