How multiple timeframe analysis is helpful in filtering trades?
After a 1.5 month long consolidation the stock has finally broken out of the channel phase forming a typical Bull & Flag pattern indicating a further upside potential confirmed by multiple timeframe analysis. This analysis is divided into two different phases based on 2 different timeframes and those are:
1. Daily Timeframe
2. 1 Hour Timeframe
Daily Timeframe
Here, the stock has formed a Bull & Flag pattern with 3 supports & resistances on both lower and upper part of the channel. A break from which was seen in the last trading candle with following probabilities in the favour of the buyer:
1. Shifting of Lows: After forming a Lower Low(LL) at 1014 the low shifted to 1067.45 forming a Higher Low(HL) which again shifted to 1155.05 making a new HL near the resistance which is a sign that bulls are becoming agressive.
2. Volume: Highest volume since last 7 days in the BO candle is seen, moreover, it is even greater than the 20-MA volume which further adds to the confidence in the trade.
3. EMA Behaviour: Exponential Moving Averages shows no signs of discrepency. Baically Shorter Term EMA is still way beyond Medium Term EMA. Here, I have taken 21-day EMA as the shorter one and 50-day EMA as the medium term one.
1 Hour timeframe
Ideally, lower timeframe is used to confirm whether bullish sentiments are still prevailing on the lower timeframe or not. If not, a trade should be neglected. But, here a whole new scenerio of another bullish price action pattern is seen which is a Inverted H&S pattern that further adds the odds in the favour of the buyer. What to look for:
1. Pattern: Ofcource, the pattern cannot be overlooked with a clear Left Shoulder(LS), Head(H) and right shoulder(RS).
2. Time spent Near the resistance: Here, the stock has spent some time near the red resistance line as mentined in the chart. A good amount of time spent near the resistance(in this case red line) is good indicator of a successful breakout.
3. Moving Average Indication: Shorter term EMA is above Medium Term EMA which is also a tick.
Conclusion:
1. EMA trend bullish on both daily and hourly timeframe. CHECK ✔
2. Price actions patterns with good consolidation. CHECK ✔
3. Volumes are above average. CHECK ✔
1. Daily Timeframe
2. 1 Hour Timeframe
Daily Timeframe
Here, the stock has formed a Bull & Flag pattern with 3 supports & resistances on both lower and upper part of the channel. A break from which was seen in the last trading candle with following probabilities in the favour of the buyer:
1. Shifting of Lows: After forming a Lower Low(LL) at 1014 the low shifted to 1067.45 forming a Higher Low(HL) which again shifted to 1155.05 making a new HL near the resistance which is a sign that bulls are becoming agressive.
2. Volume: Highest volume since last 7 days in the BO candle is seen, moreover, it is even greater than the 20-MA volume which further adds to the confidence in the trade.
3. EMA Behaviour: Exponential Moving Averages shows no signs of discrepency. Baically Shorter Term EMA is still way beyond Medium Term EMA. Here, I have taken 21-day EMA as the shorter one and 50-day EMA as the medium term one.
1 Hour timeframe
Ideally, lower timeframe is used to confirm whether bullish sentiments are still prevailing on the lower timeframe or not. If not, a trade should be neglected. But, here a whole new scenerio of another bullish price action pattern is seen which is a Inverted H&S pattern that further adds the odds in the favour of the buyer. What to look for:
1. Pattern: Ofcource, the pattern cannot be overlooked with a clear Left Shoulder(LS), Head(H) and right shoulder(RS).
2. Time spent Near the resistance: Here, the stock has spent some time near the red resistance line as mentined in the chart. A good amount of time spent near the resistance(in this case red line) is good indicator of a successful breakout.
3. Moving Average Indication: Shorter term EMA is above Medium Term EMA which is also a tick.
Conclusion:
1. EMA trend bullish on both daily and hourly timeframe. CHECK ✔
2. Price actions patterns with good consolidation. CHECK ✔
3. Volumes are above average. CHECK ✔
Comment:
Entry Triggered.
Trade closed: stop reached