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Multiple Time Frame Analysis
The fundamental idea behind Multiple Time Frame Analysis (MTFA) is that trends can appear differently depending on the time frame being analyzed. For instance, a currency pair may be in a strong uptrend on a daily chart, while showing a downtrend on a 15-minute chart. By observing multiple time frames, traders can align their strategies with the broader trend while making shorter-term trades.
Typically, traders start by analyzing higher time frames—such as the daily or weekly charts—to determine the overall trend direction. Once the trend is identified, traders can then move to lower time frames, like the hourly or 15-minute charts, to find precise entry and exit points that align with the identified trend.
For example, if a trader identifies an uptrend on the daily chart, they might look for buying opportunities on the 1-hour or 15-minute charts. This approach allows them to capture short-term price movements while staying aligned with the longer-term trend, enhancing the probability of successful trades.
Moreover, MTFA helps traders spot potential areas of support and resistance across different time frames, providing additional context for trade decisions. This comprehensive analysis can reveal patterns or signals that may not be visible on a single time frame.