Longer Time Frames V.S Shorter

Every trader has a system that works for them. Some require more patience than others while other require a quicker reaction time. Some systems work best during ranging times while other work best during trending times. Regardless of the system you use and the time frame you trade from you should always zoom in and out of various chart tenors. You can get subconsciously wrapped up in sub-trends while loosing sight of the larger picture. The pros for using longer time frames are fewer trades and potentially more precise entries. However you will be slower to react on entries and exits and may mis substantial intra-day and intra-week moves. Your stop losses are typically wider on longer time frames as well so you need to think about you risk profile as well.


We have been focusing on the daily CAD chart as many analysts have been anticipating this cross below the 50 day Moving Average. The 50 MA has held firm Resistance since the Dollar began its rally just under 2 months ago. A close below the 50 suggests the CAD will start to make a run at parity again. Many traders will look to go long the CAD on a pull back before the CAD rallies again. The recent trend lines also favors this move.

The below weekly chart confirms this move as CAD Resistance was just taken out with yesterday’s price action. The benefit of trading a weekly chart is that you are not under pressure between moves and your trades may have more precision as you smooth out price action. However, it requires significant patience and risk tolerance but if nothing else it acts as a great confirmation tool for your daily chart.


On this weekly EUR chart below the very first observation might be the most telling. The EUR, in spite of the tremendous pressure it has been under is setting up for its first back to back weekly gain since the Greece financial crisis hit the market back December of 2009. One observation does not trigger an entry but it may help you trade on the shorter time frame.

Looking at the Daily you can see the EUR has had wins 5 our of the last 6 sessions and is trying to take out near term resistance around 1.24 with more moderate Resistance holding at 1.2570. Of course you must remember that we have 3 more trading day before the weekly candle closes and anything can happen during that time. However, if it closes above the moderate level of Resistance, it may trigger some EUR longs

Written by bforex.com