Please make sure to watch our last night’s market analysis video here, if you haven’t watch it already.
And, this is our tonight markets analysis video: What Is the Most Important Time Frame in Forex and Stock Trading?
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1. What Is the Most Important Time Frame in Forex and Stock Trading?
Click Here to watch the video of the below analysis.
In tonight’s video, I have answered a very important question. Many of you ask me why I check monthly time frame every day. As I have already explained in some of my other videos, monthly time frame is so important. and the strong signals that forms on this time frame show the direction of the market for the next several months, or maybe even years.
You can see so many examples, if you check the monthly time frames of different markets. Therefore, not only I check the monthly time frame every day that I look at the daily chart, but I also check it every week on weekends, when I am checking the closed weekly candlesticks, and also at the end of the month, when the new monthly candlestick opens. I also check the monthly time frames, but in tonight’s video I have shown an example that proves that the monthly time frame is so important. Even if you are a day trader which means you take a position every day and then you close it on the same day still you have to know the direction of the market on the monthly time frame because even when the direction of a market on the shorter time frames is against the monthly time frame, the market will follow the direction of the monthly time frame suddenly, and that causes you to lose money.
If you go against the monthly time frame’s direction as a day trader, while you use the 30min, 1hr or 4hrs chart, your stop loss will be triggered more. So please follow this video to the end
to understand what I mean. Then, at the end of the video, if you think you have learned something, please like the video, so that YouTube recommends the video to other traders who maybe lose a lot of money, just because they are not used to check the monthly time frame. Also please don’t forget to subscribe to our YouTube Channel.
Below is google’s monthly time frame. I have already talked about this market in my yesterday’s video. Here on Google monthly chart I am going to show you how stronger the support and resistance levels and lines and candlestick signals are, compared to the shorter time frames. As you can see, Google has already formed a resistance level on the monthly chart. I have plotted this line to show the resistance level. The line was plotted at $1531.43 which is the high price of February 2020 monthly candlestick on Google’s stock price chart, and monthly time frame.
After the February 2020 monthly candlestick was formed, the market went all the way down and formed two huge bearish candlesticks. This down movement was related to the Coronavirus pandemic, but after that the market went back to normal and started following the same route it has been following for so many years. As you can see below, there is a long and continued uptrend on Google stock price chart. A huge Piercing Line Candlestick formed on the monthly chart by April 2020 monthly candlestick, and then the market went up, but once it reached the $1531.43 resistance level, it reacted to it and stopped from going up. As you can see below, the current monthly candlestick tested the resistance level, but it reacted to it and now is going down. The current monthly candlestick still has three days to mature and close, but it doesn’t seem that it will go up during these three days to close above this resistance level, although everything is possible on the stock and currency markets. It doesn’t seem that the fear that has taken the control of the market allows this candlestick to go up and close above the resistance level. If it does, then we are going to look at this market from a different angle. It means that this market is going to be Bullish for the next several months and years again. That would be a strong buy signal, if the currently monthly candlestick closes above the resistance level. However, As I said, it doesn’t look so. It seems this candlestick is going to close below this resistance level, so I have plotted the $1531.43 level on the monthly time frame to show the resistance level:
Now let’s check the shorter time frames. Below is the weekly time frame. The line you see on this chart is exactly the same resistance level. I didn’t limit the resistance level to the monthly chart
because I wanted to see exactly the same resistance level on the shorter time frames to tell you how strong the monthly time frame is. As you can see below, one of the candlesticks has closed above
the resistance level which means the resistance level was broken, but then the other candlesticks go down and close below the resistance level:
Now let’s check the daily time frame. As you can see below, the same thing happen on the daily time frame as well. Some of the candlesticks have closed above the $1531.43 resistance level, and also two candlesticks have completely formed above the resistance level, but later the market goes down and closes below the resistance level:
What does this mean to you???
It means when you see a strong resistance level on the monthly time frame, the market will follow and respect this resistance level eventually, even if it has been broken on the shorter time frames. So, if you have been following the shorter time frames like weekly, the candlesticks that broke above the resistance level tell you that you have a long trade setup, and you could go long (buy). But, then you would be regretful because the market would go against you. Similarly, if you have been following the daily time frame, many of candlesticks like the July 10th daily candlestick on the below chart, and also the July 20th daily candlestick would tell you that you could go long, but then later you would be regretful because the market would go against you.
But if you have been following the monthly candlestick, you wouldn’t take any long position as long as no candlestick on the monthly time frame would close above the $1531.43 resistance level, which means the resistance level has been broken really on the monthly time frame. As long as this resistance level is intact and is not broken, you cannot think about taking a long p position. If the currently forming monthly candlestick closes as it currently is (with a long upper shadow), most probably the next candlestick would be a bearish candlestick and we will have a Bearish Engulfing Pattern formed on the chart. Or at least we can have some Doji candlesticks and some candlestick with long upper and lower shadows will form around the $1531.43 resistance level because this level is so important.
The big buyers of the market are looking at $1531.43 resistance level. You as a retail trader have to look at this resistance level as well, if you don’t want to lose money. The long upper shadow of the currently forming monthly candlestick (July 2020) tells you that many of the shareholders of this market have sold their shares and got out of this market, when the market
reached the $1531.43 level, and it is possible that many others do the same, and you will lose money, if you go against them.
So, the conclusion is that monthly time frame is so important. Even if you are a day trader, you must be aware of the direction of the market on the monthly time frame. You must be aware of the strong support and resistance levels and lines and candlestick signals on the monthly time frame. If you go against them you will lose money.
2. My Today’s MT4 Tip of the Day: How to Add Tools Like Gann and Fibonacci to MT4 Line Studies Toolbar
Click Here to watch the video of this part of my last night’s video that starts from 08:10.
You can also read the article here.
3. Day-Trading Using the Daily Time Frame and Daily Candlesticks
Click Here to watch the video of this part of my last night’s video that starts from 09:55.
I am going to give you an introduction about our daily candlestick day trading system that I talked about it in my previous video. In this system we check the daily candlestick of different markets. Once the daily candlestick is closed and the new one is opened, which is now at 5 pm EST time now, then based on the things that we know from the candlestick signals, we decide to get in the market or set a pending order. Usually these kinds of positions last only for the next 24 hours or less. That’s why it is called day trading, but day traders use the shorter time frames like 1hr or 30 minutes to do day-trading, which is what i don’t recommend you at all because it is wasting of time and money.
But day trading using the daily candlestick is good because compared to the shorter time frames, daily time frame is much stronger and you only need half an hour to check the daily time frame of the different markets that you follow. So unlike the day-traders who are used to sit at their computers several hours a day, you don’t have to spend more than half an hour, if you do your day-trading using the daily candlesticks. But before taking any positions using this system, you need to make sure that you understand the candlestick signals, otherwise you will lose money. So I will start giving you a few tips every day about this system, and I will analyze some of the markets’ daily candlesticks at the open of the daily candlestick in my videos.
Let’s start with EUR/USD. As you can see on the below chart (also please make sure to watch the video here), this market is strongly bullish. So, the first thing that you must keep in your mind is that you shouldn’t go against such a strong bullish market, unless a too strong short trade setup or sell signal forms, which is what we don’t see here right now. Therefore, you must forget about taking any short positions when you are checking a bullish market. When you know this, then you start checking the candlesticks, especially the last closed daily candlestick. In this case (below), the last closed daily candlestick which is Iuly 28th daily candlestick has closed with a bearish body on a strong bullish market. This doesn’t mean a signal to us. This market is strongly bullish. You
could say that the next candlestick would be a bearish candlestick, if you look at the upper shadow of July 27 candlestick, but this upper shadow is not enough to take a short position as well.
Now the market is overbought and is exhausted, and so it is possible that it goes down for a while, but just because the uptrend is so strong, most probably bulls will take the control again and will take the price up. That’s the time that we can take long positions. So for today, there is no trade setup. But tomorrow or during the next days, if the market goes up and breaks above the close price of the last candlesticks, we can think about taking a long position. When this happens, I will tell you how we can do that:
Thank you for watching this video. Please like the video if you have enjoyed it 🙂