In the trading process, how can we determine the trend direction and entry timing through different time frames?
1. Core Principle: Big Time Frame Steers, Small Time Frame Rows
1. Big Time Frame: Strategic Beacon
The big time frame, such as daily and weekly charts, serves as the strategic framework for trading. It clearly informs investors:
① Trend Direction: Determine whether the market or individual cryptocurrency is in an uptrend, downtrend, or consolidation phase, addressing the question of "can we trade?" For example, if the weekly chart shows an uptrend, it means the overall direction is upward, making it more reasonable to go long.
② Key Levels: Indicate important support and resistance levels, i.e., "where is important." These levels have a significant impact on price movements and are crucial references for trading decisions.
2. Small Time Frame: Tactical Blade
The small time frame, such as 4-hour and 15-minute charts, is a tactical tool for trading. It focuses on:
① Entry Timing: Precisely capturing the right entry points, addressing the question of "when to trade." For instance, after confirming an uptrend in the big time frame, one can use the small time frame to find the end of a pullback and the upcoming opportunity to enter again.
② Risk Control: Helps determine stop-loss positions, i.e., "how to set a stop-loss." Based on the volatility characteristics and key levels of the small time frame, reasonable stop-loss settings can be established to control trading risks.
2. The Interaction Secrets of Big and Small Time Frames
1. Suppression Effect
When the small time frame reaches the high point of the big time frame, the big time frame will exert suppression on the small time frame. At this point, the upward momentum of the small time frame may be suppressed, and the price may experience a pullback or stagnation.
2. Guiding Effect
If the small time frame successfully breaks through the key level of the big time frame's high point, the small time frame will guide the big time frame. This may indicate an acceleration or reversal of the trend and is an important trading signal.
3. Pullback Support
In an uptrend of the big time frame, when the small time frame pulls back to the support level of the big time frame's low point, if it receives effective support, it is highly likely to continue the uptrend. Investors can continue to be bullish and consider adding to their positions or holding.
4. Healthy Uptrend Characteristics
A healthy uptrend will show characteristics of continuously making new highs in highs and higher lows across both time frames. This reflects that bullish forces continue to dominate, and the trend has strong continuity.
