Multiple Time Frame Analysis

Multiple timeframes analysis equals using 2 chart time frames to trade xauusd - a shorter one used for trading & a longer one to check the trend.

Since it's always good to follow the trend, in Multiple Time Frame Analysis, the longer time frame gives us the direction of the long term trend.

If the long-term market direction supports the direction of the smaller time frame then the probability of being profitable is greatly increased. This is because even if you make a mistake the long-term trend will eventually save you. Also if you trade with direction of the market, then mostly you will be on the winning side, this is what this type of analysis is all about.

Remember there's a popular saying by many Gold and stock market investors that says: 'The trend is your best friend' - never go against the market.

There are 4 different types of traders - all these use different charts to trade as explained below.

Examples of how each type of trader uses multiple Gold timeframes analysis strategy:

Scalpers

This group holds on to their trade transactions for only a few minutes. The scalper never holds on to a trade for more than ten minutes. With the goal of earning small sums of pips as a profit, 5 - 20 pips.

A Scalper using 1 minute chart wants to go long, checks 5 min chart, which looks like the one below, since 5 min show trend is moving up, then decides from the analysis it is ok to buy.

Day Traders

This group holds onto their trades for a few hours but not for more than a day. With objective to make quite a number of pips: 30 - 100 pips.

Day trader trading 15 minute chart wants to go long, checks 1 Hour chart, which looks like the one below, since 1 hour displays market trend is moving up, then decides from the analysis it is ok to buy

Swing Traders

This group holds on to their trade transactions for a few days to a week. With the objective to make a big number of pips: 100 - 400 pips.

Swing trader using H1 chart wants to go short, checks 4 hour chart, which looks like the example shown below, since 4 hour displays the trend is moving down, then decides from the analysis it is ok to sell.

Position traders

These are the investors that hold on to their trade transactions for weeks or months. With the objective to make a big number of pips: 300 - 1000 pips.

Position trader using daily chart wants to short sell, checks the weekly chart, weekly looks like one below, since weekly highlights the trend is moving down, then decides from the analysis it is ok to sell.

How to Define A XAUUSD Trend

Using a system has 3 indicators - MA Crossover System, RSI & MACD & uses simple trading guide-lines to define the trend. The rules are:

Upward trend

Both Moving Averages Moving Up

RSI Indicator above 50 Mark

MACD Above Center Line

Down-wards Trend

Both Moving Averages Moving Down

RSI Indicator below 50 Mark

MACD Below Centerline

For More details about this system strategy read: How Do I Generate Signals with a System.