Multi Time Frame Analysis (MTFA) Approaches

 

Multi Time Frame Analysis (MTFA) Approaches

Two common MTFA setups for stock selection:

  1. Higher Time Frame Making New Highs, Lower Time Frame at Support or Turning Bullish

    • The higher timeframe (e.g., weekly or daily) is in a strong uptrend, making new highs.

    • The lower timeframe (e.g., hourly or 15-min) is at support or showing bullish reversal signals.

  2. Higher Time Frame at Support After Correction, Lower Time Frame Giving Breakouts

    • The higher timeframe is at a significant support or after a correction, not making new highs yet.

    • The lower timeframe is showing a breakout or strong bullish momentum.

Other MTFA strategies include:

  • Trend Following: Aligning trades in the direction of the higher timeframe trend, using lower timeframes for precise entries.

  • Confluence Strategy: Looking for agreement of signals (trend, support/resistance, patterns) across multiple timeframes for higher probability trades.

  • Price Pattern Strategy: Identifying patterns (like double bottoms or triangles) on higher timeframes, then using lower timeframes for entry timing.

  • Multi-Layered Breakout: Watching for breakouts on higher timeframes and confirming them on lower timeframes before entering.

  • Macro-Micro Synergy: Combining macro (higher timeframe or economic) trends with micro (lower timeframe) technical signals.

When to Use Each Approach

The choice between these MTFA setups depends on the broader market context, especially the state of major indices:

1. When Major Indices Are Reversing from Lows (Short/Medium-Term Bottoming)

  • Best Approach: Use the higher timeframe at support after correction, lower timeframe giving breakouts setup.

  • Reasoning: At market bottoms or after corrections, the higher timeframe is at or near support. The lower timeframe breakout signals the start of a new up-move, offering early entry as the trend reverses.

  • Application: This approach helps you catch trend reversals early, before the higher timeframe resumes making new highs.

2. When Major Indices Are Making New Highs (Strong Uptrend)

  • Best Approach: Use the higher timeframe making new highs, lower timeframe at support or turning bullish setup.

  • Reasoning: In a strong uptrend, buying on dips (when the lower timeframe is at support or shows a bullish reversal) aligns you with the prevailing trend and reduces risk of buying at short-term tops.

  • Application: This lets you participate in the trend continuation with better timing and lower risk, rather than chasing extended moves.

Summary Table

Market ContextHigher Timeframe SignalLower Timeframe SignalWhen to Use
Indices reversing from lows (after correction)At support, not yet making new highsBreakout or strong bullish moveEarly in new uptrend or reversal


Indices making new highs (strong uptrend)

Making new highs, trend continuation

At support or turning bullish

Buying dips in ongoing uptrend

Key MTFA Principles

  • Always start with the higher timeframe to determine the main trend or key support/resistance.

  • Use the lower timeframe for precise entry and exit timing, aligning with the higher timeframe context.

  • Avoid trading against the higher timeframe trend, as this increases risk and reduces probability of success.

  • Confirm signals across timeframes for higher conviction and reduced false signals.

Conclusion

  • Use the "higher timeframe at support, lower timeframe breakout" setup when markets are bottoming or reversing after a correction.

  • Use the "higher timeframe making new highs, lower timeframe at support" setup when markets are trending strongly and making new highs.

  • For best results, always align your trades with the overall market cycle and confirm signals across multiple timeframes.


Comments

Post a Comment

Popular posts from this blog

Income Tax Calculator Excel AY 2025-26

  Key Features: Old and New Regime Comparison: Compare taxes under both regimes and choose the one that benefits you the most. Free Download: Download the Excel sheet for free and use it at your convenience. User-Friendly: Simple and easy-to-use format with pre-filled formulas, so you can just enter your details. Tax Computation for FY 2024-25 (AY 2025-26): Updated for the latest tax rates and slabs. Customizable: Modify or adapt the sheet for personal use or add more details if required           Download Income Tax Calculator Excel (AY 2025-26)
Read more

DISCLAIMER

All the views and contents mentioned in this site are merely for educational purposes and are not recommendations or tips offered to any person(s) with respect to the purchase or sale of the stocks / futures. I do not accept any liability/loss/profit occurring from the use of any content from this site.  No Author at intellectualtrading.blogspot.in is registered with  SEBI  or any regulating authority as a Research Analyst or an Investment Adviser. Financial markets are volatile in nature and is subject to market risks. Hence all the visitors are requested to apply their prudence and consult their financial advisor before acting on any of the recommendations by this site or any of its mode.
Read more

Quarterly Earnings Momentum Stocks : 10-02-2025

  Momentum Stock Scanner: 1) Quarterly sales grew by over 20%. 2) Quarterly net profit surged by more than 20%. 3) Operating profit is showing improvement. 4) Stock price is approaching its 52-week high. 5) Market capitalization exceeds ₹500 crore. Click here to view stock list Quarterly Sales (YoY Comparison):  This parameter compares the company's revenue this quarter with the same quarter last year. By setting this to 1.2x, we're looking for companies whose revenue has grown by at least 20% year over year (YoY). This shows strong sales momentum. Quarterly Net Profit (YoY Comparison):  This compares the company's net profit with the same quarter last year. By multiplying by 1.2, we’re searching for companies with at least 20% net profit growth YoY. A consistent increase in profits signals solid business growth. Operating Profit Margin (OPM) Comparison:  OPM represents the company’s profit from its core operations, excluding taxes and interest. Here, we’re looking f...
Read more