Many friends often complain to me that they are always confused by short-term fluctuations when looking at candlestick charts, sometimes rushing to buy and then panicking to sell, ultimately earning little and losing a lot.
In fact, the solution is very simple: use multi-timeframe analysis to separate the overall direction from entry and exit points.
The thought process I often use is the "three-layer framework": the long-term trend is determined by a larger timeframe, the medium-term range is determined by a mid timeframe, and the short-term timing is determined by a smaller timeframe.
First Layer: Daily Direction
First, look at the 4-hour candlestick chart, which can filter out a lot of short-term noise.
If the price keeps making higher highs and higher lows, that indicates a bullish trend, so look for low points to enter.
If both highs and lows are moving downwards, that indicates a bearish trend, and the pullbacks are opportunities.
If the price is repeatedly oscillating within a range, then don’t force it; it’s better to move less.
The trend is fundamental; if the direction is wrong, even the most precise entry point is useless.
Second Layer: Key Areas
Once the overall direction is determined, switch to the 1-hour candlestick chart to look for support and resistance.
Support areas often appear near previous lows and moving averages, which are potential buying points for bulls.
Resistance areas are generally at previous highs or densely traded areas, where bulls should be cautious and bears can wait.
The focus of this layer is to define boundaries for entry and exit rather than blindly chasing.
Third Layer: Entry Timing
Finally, look at the 15-minute chart, which is specifically used to determine when to take action.
If a reversal pattern appears at a key position, such as engulfing, divergence, or a moving average golden cross, that is a signal.
If there is a breakout, it’s essential to confirm that the trading volume is also increasing, otherwise, you may get caught in a false breakout.
The role of the small timeframe is to allow for more precise entries.
Practical Mantra: Direction—Area—Timing
The larger timeframe determines whether you should go long or short.
The medium timeframe outlines your entry area.
The small timeframe picks out the specific candlestick you want to enter.
If the conclusions of the three timeframes conflict, then don’t force a trade; being observant is more important than acting rashly.
Focusing on the small timeframe can easily lead you to be led astray; the truly stable method is to combine the timeframes.
Patience + Discipline are more profitable than frequent trading.
What you lack is not effort; this market is also not short of opportunities. What you truly lack is someone who can help you achieve stable profits in this market.
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