Multi-Time Frame Analysis is the analysis of a market over several timelines. For example, hourly, daily, weekly, monthly, etc. The more timelines that are in agreement, the sounder the investing strategy and the safer the play. In essence, the idea is to determine the trend over multiple periods. For example, in the daily timeline, we will look at a minimum of one year’s worth of data and each bar will represent one day’s worth of data. On a weekly chart, we will examine at least 5 years worth of data and each bar will represent a week’s worth of data. On a monthly chart, we will examine 10 years worth of data and each bar represents a month’s worth of data. The idea is to get as many timelines to agree as possible.
However please remember that at the Tactical Investor, Mass psychology is the tool we favour the most. We recently found a way to combine the best parts of Technical Analysis with the most important elements of Mass psychology and the end result is the Trend Indicator. This tool predicts the trend in advance and thus provides one with ample time to build up a list of stocks to purchase if the trend is up or a list of stocks to short if the trend is down.
The focus here can be on the hourly and daily charts. The goal would, therefore, be to wait until the technical indicators on both the hourly and daily charts are trading in the same ranges. If you are looking to go long, then wait till both are trading in the oversold ranges and vice versaThe focus should be on the weekly and monthly charts. When the picture (technical indicators) on both are trading in sync, this is the best time to open long or short position