Do you know what the biggest advantage of long time frame trading is? You don’t go against the main direction of the markets. This is what I have explained in my last night video. Please watch and like the video. Also please don’t forget to Subscribe to Our YouTube Channel. not to miss our videos.
Let me show you some examples.
On EUR/USD monthly time frame, we already had a resistance breakout which is a long trade setup for us.
The August 2020 monthly candlestick has closed above the resistance line and we know this as a long trade setup, and I expect that EUR/USD goes up and reaches the 1.25548 resistance level sooner than later (see the chart below).
It seems now the currently forming candlestick is going down to retest the broken resistance line which is good, because the reaction of the currently forming monthly candlestick, against the broken resistance line tells us that whether the broken resistance line is a valid line and is now working as a support line or not.
However, it is possible that it goes up without retesting. That doesn’t matter for now. Here, what I’m trying to say is that we have a long trade setup on the monthly time frame, which means the main direction of this market is an upward direction.
It means EUR/USD wants to go up because it is the monthly time frame and the monthly time frame shows the main direction of the market:
However, it happens that on the shorter time frames you locate a sell signal or a short trade setup that tells you to sell EUR against USD. For example, on the daily time frame, September 1st daily candlestick that has reacted to the small and local resistance level, went down and closed with a long upper shadow.
The next candlestick which also confirms that maybe this market wants to go down. Of course it was stopped by Bollinger middle band as a support, and so it has closed with a meaningful lower shadow, but there are so many traders who take this as a sell signal to go short.
Also the 2020.08.19 daily candlestick also looks like a sell signal for many traders to go short, but you can see on the chart below that what would happened if they had taken these sell signals: The market would go against them and triggered their stop loss why because the main direction of the market now is an upward direction according to the monthly time frame.
This means when you are aware of the market direction on the monthly time frame, you will never go against this direction, and so there is a lower probability that you take a losing position and you lose money:
So on EUR/USD daily chart, you won’t take a short position, because you do know that there is a resistance breakout on the monthly time frame and even if the price goes down a little, it is just to retest the broken resistance line on the monthly time frame, but it will go up and it will bounce up sooner than later.
So you don’t take the short trade setups or sell signals you see on the above chart, and so you won’t lose money. This is the big and important advantage of long time frame trading.
Yes, on the daily time frame, we have some weak sell signals below the resistance level, but I don’t care about them because I do know that the main direction of this market is an upward direction and it is just going sideways for a while and most probably it will break above the resistance level to go up and to follow the long trade setup that we have on the monthly time frame.
As you see on the above daily chart, the resistance level that we had located above this Bollinger Band Squeeze is a valid resistance level because September 1st daily candlestick has reacted to it, and hasn’t been able to close above it, and so it went down and closed below the 1.1965 resistance level that I am showing it to you one more time on the below chart.
Later, if this market keeps moving sideways, we may have to adjust the resistance level. Let’s leave it like that for now and see what will happen during the next several days:
It is the same with USD/CHF, but from the opposite direction. The 0.90086 support level you can see on the chart below is working as a valid support level as well, and it seems now this market is going up maybe to retest the broken support level once again, which is indeed the support level on the monthly time frame:
It is possible that it goes all the way up to retest the broken support level, but I don’t think that bulls are that strong to do it because the upper shadow of 2020.09.02 daily candlestick tells you that bears still have the control and maybe the price won’t go up to reach the broken support level: Candlestick Shadows Explained
But it is normal to go up and retest a broken support level. Sometimes markets retest the broken support and resistance levels at least a few times before they follow the direction of the trade setup.
Therefore, here you learn about the value of long time frame trading. It prevents you from going against the main direction of markets and having your stop loss triggered. Those who look at short time frames, and only see the trade setups that form there will lose a lot because they go against the monthly time frame most of the time.
Now, let’s see what is going on the other markets…
Click Here to watch the video of this part that starts from 05:28. Please like the video 🙂
With AUD/USD, I am waiting for the market to give us a chance to take a long position. It has been going up very strongly during the past several weeks, but it seems now it is going down.
I hope it forms a sideways market and a Bollinger Bands Squeeze on the daily chart, with a resistance level to give us the chance to take a long position, because according to the strong long trade setup that I can see here on the monthly time frame, this market is going to go up at least for over 800 pips to reach the 0.8135 resistance level, and if it gives us the chance to take the advantage of this movement, we will make hundreds of pips I am waiting for that:
Please watch the video of the other markets analysis by clicking on the links below, and please don’t forget to like the video:
If you are new here, please make sure to read these articles to learn how our trading system works:
- Become a Profitable Forex Trader in 5 Easy Steps
- Still Losing in Forex?
- What Is the Most Important Time Frame in Forex and Stock Trading?
- Candlestick Trading – The Language of Japanese Candlesticks
- Bollinger Bands Squeeze: What Is It and How to Trade It?
- Bollinger Bands Squeeze Trading Strategy
Don’t forget the power of long time frame trading. It turns losing traders into consistently profitable traders.