Multiple Time Frame Analysis

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

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

If the long-term market direction supports the direction of the smaller chart timeframe 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'll be on the winning side, this is what this analysis is all about.

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

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

Examples of how each type of trader uses multiple XAUUSD time frames analysis strategy:

Scalpers

This group holds on to their trades for only a few minutes. The scalper never holds on to a trade for more than ten minutes. With the objective of making small amounts of pips as 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 H 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 trades for a few days to a week. With the objective to make a large number of pips: 100 - 400 pips.

Swing trader using 1 H 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 trades for weeks or months. With the objective to make a large 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 MAs Moving Up

RSI above 50

MACD Above Center Line

Down-ward Trend

Both MAs Moving Down

RSI below 50

MACD Below Centerline

For More explanation about this system read: How to Generate Signals with a System.