Best Way to Trade Multiple Timeframes Alignment in Crypto

The best way to trade multiple timeframes alignment in crypto has been detailed in this guide.

The goal is to ensure you no longer rely on only one timeframe when making entries.

Think of it as no more tunnel vision as you trade with correlations.

You also stand to benefit so much more from monitoring more than one timeframe on the same trading pair.

A good example is having to deal with fewer false breaks or breakouts in your current timeframe.

It starts with using specific timeframes for confirmation and another for entries or exits.

Over time you’ll come to appreciate technical analysis with multiple timeframes.

So pay the extra time and attention when going through this guide as you unravel how to trade multiple timeframes alignment in crypto.

What You Need to Know About Timeframes

Here are some things you need to know about timeframes.

1. Essential Elements of Charts:

Every chart has a timeframe (TF).

It doesn’t matter whether the chart is on trading apps like TradingView and TabTrader or cryptocurrency exchanges like Binance and Kucoin.

Bitcoin timeframe correlation

These timeframes tell a story and the story gradually unravels on lower timeframes.

Let’s say the 1-day timeframe is a book in a library, while the 4-hour timeframe is like a section where the book in the library is.

The 30-minute timeframe could be the name of the book in the section, helping you locate it.

And the 5-minutes TF could be the actual contents of the book.

What can you make out of this real-life description?

Timeframes are like a map.

The lower the timeframe, the more you see into the directions outlined on the map.

Now don’t get confused.

Our focus is neither on books nor maps.

Interestingly, the movements of the lower timeframes compound to form the shapes you see on the higher timeframes.

2. Changes Across Timeframes:

Every timeframe is important, some more than others.

That’s why you’ll see patterns on higher timeframes (HTFs) stand the test of time unlike those on lower timeframes (LTFs).

On the Bitcoin/USDT 1-day chart below, the correction lasted for three months. This correction was evident on the daily chart.

The hourly chart could be used to spot the swings within this correction. The swings were intact for a month.

Further, the minutes’ timeframe held minor swings within major swings on the hourly. These minor swings lasted for a week.

best way to trade multiple timeframes alignment in crypto

There’s also the noticeable difference each chart has.

As such, what you see on a five-minute chart will significantly differ from what’s evident on a four-hour chart.

Each chart tells the same story in a slightly different way.

Remember Elliot Wave and its story on fractals?

Here’s where you may use it to understand various timeframes.

3. Various Degree of Strengths and Weaknesses:

The long-term timeframes such as weekly and monthly have stronger levels that will pose greater resistance to price.

Whereas short-term timeframes like minutes and hourly will pose temporary resistance to price.

But then there could be a confluence of weak and strong key levels, which is what multiple timeframe analysis is all about.

This means you need to watch out if the reversals or pullbacks you’re getting are on an LTF, HTF, or a combination of both.

How to Use Multiple Timeframes in Trading

The multiple timeframe trading strategy is a must-know.

Here’s how to use multiple timeframes in trading.

  • Get the ideal timeframes.
  • Look for a confluence of signals.
  • Spot the trend or pattern.
  • Set your stop loss.

1. Get the Ideal Timeframes:

A factor of 4 or 6 is what you need to get started with multiple timeframe analysis.

This is a strategy that requires you to multiply your trading timeframe by either 4 or 6.

What does that mean?

Let’s say you’re scalping with the 5m timeframe.

Then you’ll be multiplying the value ‘5’ with either ‘4’ or ‘6’.

Your result will be 20 or 30.

This means one of these timeframes can be used for your higher timeframe analysis.

best way to trade multiple timeframes alignment in crypto

2. Look for a Confluence of Signals:

Now you have two timeframes to work with.

You’ll start from the higher timeframe and work your way to the lower timeframe.

It’s called a top-down approach.

Here’s a more detailed breakdown of what you’re going to do.

  • Check if entry or exit zones align between both timeframes.
  • Check if the zone is only on one timeframe independent of another.

Scenario 1:

Price could hit resistance on both the lower and higher timeframe.

It could also be a support level on both timeframes.

If it’s an area of resistance on both time frames, you might look to take profit or keep a close watch for bearish candlesticks to take a short.

Some of these candles include hanging man, shooting star, bearish engulfing, dark cloud cover, and evening star.

Simply pay attention to a candle that fails to close above resistance on the higher timeframe, and then look for these candlestick patterns on the lower timeframe.

Your entries will be made using these patterns.

Best way to trade multiple timeframe analysis 8

The second chart below shows how you would’ve waited for a retest of the downward trendline.

And then take a short when the bearish candles have formed at the level.

A stop would’ve been placed at the previous high.

Best way to trade multiple timeframe analysis 8

Outcome

Here’s the outcome of the trade.

Price breached the stop and retested the channel line. Now that trade ended with a small loss on your part.

Another shorting opportunity was presented when the trendline on the 5 minutes timeframe was breached.

And you would’ve been profitable if you’d taken the trade.

best way to trade multiple timeframes alignment in crypto

On the other hand, price trading around support on both timeframes means you’ll be watching for a reversal from the bottom or its break.

A reversal is often hinted at by bullish candlesticks like a hammer, certain doji, bullish engulfing, piercing pattern, morning star, etc.

There could be multiple bullish candles forming a rounding bottom, double bottom, inverse head & shoulders, etc.

You’d wait for a spring at support. This spring is price’s failure to close below a level on a higher timeframe.

And then make entries using the bullish candlesticks.

The chart below shows the morning star as a bullish sign to long at support. There was a spring in form of a hammer at the marked region.

On the other hand, a candle’s close below your HTF support would require you go short.

But that’s tricky, which is why you might have to wait for several candles to close below the level or retest it.

Scenario 2:

What if it’s a resistance level on the lower timeframe but a support zone on the higher timeframe.

Do you short or long?

And what if price is trading around support on the lower timeframe but an area of resistance on the higher timeframe.

What would you do?

Now in both cases, you’d wait for an alignment of both timeframes.

In the first instance, it’ll be risky to short from this resistance since it’s a support zone in the long run.

Price also has a higher chance of rallying. It’s even possible the minor resistance might be breached.

So you’d wait for price to reverse to support on the lower timeframe before longing.

The second scenario is where you’d wait for price to rally to resistance on the short timeframe.

And then you’d take a short. Here, you’d still be trading around the resistance zone.

The chart below offers more clarity.

3. Spot the Trend or Pattern:

You may have successfully gotten a confluence of signals from two timeframes.

However, you need to know what the higher timeframe trend or pattern is.

Is it an uptrend or downtrend?

For an uptrend, you’ll need to check if the trend is constricted in an ascending broadening wedge, rising channel, etc.

A bearish trend would often create patterns like a descending broadening wedge, falling channel, etc.

The trend and patterns can be traded on the lower timeframe.

You can check each of the patterns linked above to see how best to trade them.

4. Set Your Stop Loss:

Your entry timeframe can be used to set a stop loss and so can your confirmation timeframe.

Which should you use?

Your choice of which depends on your trading strategy and even the leverage size used.

For example, you’ll place your stop loss on your entry timeframe if you’re scalping or swing trading.

But then, you may choose to place this stop on the higher or confirmation timeframe.

And that’s only if your leverage size is a small one.

Now it’ll really pose concerns if you use a leverage size of 20, 25, 30, or higher and then place a stop on the higher chart.

This could lead to huge losses.

The same might not be the case with a leverage size of 3, 4, and 5.

Hence, strong support or resistance can be used to place your stop.

The good thing here is that your stop will be hit less often. However, you’ll your profit target might be closer especially if you don’t plan to hold for days.

How to Show Multiple Timeframes on Tradingview

It’s possible to multiple timeframes on TradingView.

This means that you can have maybe the 15 minutes timeframe turned on and the 4-hour timeframe at the same time.

How’s that possible?

Here are two simple ways.

1. Split Screen:

Your computer screen can be split into different parts on TradingView.

And this allows you to open two to eight charts simultaneously.

This feature can be accessed by doing the following:

  • Click on the ‘Layout’ menu on the top right corner of the screen.
  • Select the layout of your choice.
  • You may also want to sync certain elements like drawings on both charts.
  • Set the trading pairs on each chart. It could be the same or different pairs.
  • Choose the respective timeframes on each chart.

And that’s all there is to it!

2. Switch to a New Tab:

You need a premium account to access this functionality since the free account does not support it.

Once you’ve upgraded to TradingView Pro, you’ll be able to open multiple tabs at a time.

Your ability to do so allows you to access the same chart on different timeframes.

Go ahead and try it on your Google Chrome, Mozilla Firefox, or any other web browser.

Multiple Timeframe Confluence

Multiple timeframe confluence is the intersection of the same signal from two or more timeframes.

For instance, price may be trading around support on the 1-hour and 15-minute timeframes.

And this creates a common area to trade from. Call it a correlation on the same chart.

How to trade multiple timeframes

You’d also be using the same trading strategy of buying from support to take profit at resistance.

This is because the higher timeframe has posed great support or resistance to price.

And the lower timeframe would often follow the path carved by previous candlesticks.

Also, think of it as being able to predict a support and resistance level on the lower timeframe using a higher timeframe.

Good knowledge of confluence is what you need on how to trade multiple time frames.

Multiple Timeframe Chart Scalping

Bitcoin, Ethereum, Matic, and other crypto pairs can be traded easily on lower timeframes using multiple timeframe chart scalping.

Check the steps below on how to proceed:

  • Use 3m or 5m for entries.
  • Use m30 or 1h for confirmation.

1. Use 3m or 5m for Entries:

Scalping means you’ll be taking little profits from the market.

And this trading technique is best done with timeframes between 3m and 5m.

Some traders may go as low as 1m but there will be lots of false breaks.

Even the smartest trader will have to deal with these breaks given that levels created on this timeframe are not so strong.

Nonetheless, you can still use 1m in a very volatile market.

An example is when Shiba or doge is rallying or dumping.

On the other hand, these timeframes will be used to make entries and exits.

You may also want to apply the pivot trading technique during your scalps.

2. Use 30 Minutes or 1 Hour for Confirmation

Scalping with 5 minutes timeframe and using a factor of 6 means your higher timeframe is 30 minutes.

A factor of 4 results in the 20 minutes timeframe.

However, not all charting software support the 20 minutes timeframe.

It’s the same way using a factor of 4 or 6 on 3 minutes will yield 12 minutes or 18 minutes timeframes, which may be hard to find on charts.

Therefore, 30m can be used in either case to confirm entries or exits.

Multiple Timeframe Analysis Examples

Here are some multiple timeframe analysis examples

Example 1: Scalping

The BTC/USDT chart below is of the 5 minutes and 30 minutes timeframe.

Price is in a falling channel on both timeframes. As such, the signal you’re getting aligns on both the high and low interfaces.

You’d look to long at support ($31400) and take profit at resistance ($31700).

A moderate leverage size of let’s say 15 or 20 would do quite well here since the profit margin is small.

best way to trade multiple timeframes alignment in crypto

Another example of scalping with multiple timeframes.

This is a BTC/USDT chart of the 5 minutes and 1 hour chart.

The 30 minutes chart is the ideal timeframe to use but there was a need to show the entire symmetrical triangle.

Now this pattern can be traded both ways on 5 minutes since it can breakout in either direction.

You can trade the swing highs or swing lows.

best way to trade multiple timeframes alignment in crypto

On the 5-minutes timeframe, you can see potential regions to long, short, and take profit (TP) from.

You’d wait for the first two highs and lows of the trend to be formed and then make an entry on the third retest of the minor trendline.

You’d notice price has often formed a habit of creating a partial advance to the channel line.

Hence, the channel’s midsection could serve as a profit target.

Example 2: Swing Trading

A BTC/USDT 4-hour and 12-hour chart has been used in the crypto multiple timeframe analysis below.

The 16-hour timeframe would’ve been ideal on a factor of 4. But that timeframe is inaccessible.

Here, the EMA 8 is acting as a resistance to price. It’s also an area of resistance since the candles on the left respected the level.

On the lower timeframe, a short could’ve been taken to the closest support which is around $29750.

Your stop would be the high is the shooting star and precisely around $30600.

how to trade multiple time frames

Here’s another swing trading example.

A Matic/USDT 3-hour and 12-hour chart has been used. The product of 3 and 4 gives 12, which is why the 12-hour chart is used as the higher timeframe here.

Price is trading in a descending triangle, which is a bearish pattern.

Now on the lower timeframe, there’s already a downward reversal and price is close to the support line.

Hence, you can’t take a short at the current region.

It’s ideal to wait for a candle close below the support and then place a stop loss above the line.

multiple time frame confluence

Frequently Asked Questions

Here are answers to some frequently asked questions.

1. Best Crypto Timeframe:

The best timeframe to trade cryptocurrency depends on your trading strategy.

That is, whether you are a day trader, swing trader, or investor.

Day traders or scalpers can use the 3 minutes or 5 minutes timeframes to make entries and exits.

Whereas swing traders can rely on timeframes between 30 minutes and 1 hour. While the 1 day and 4-hour TF can be used for confirmation.

Investors, on the other hand, can trade with the daily and weekly timeframes.


2. Best Timeframe for Trend Trading

There are long-term, medium-term, and short-term trends.

Long-term trends last for months or years.

As such, they are best spotted on higher timeframes like weekly and monthly.

Medium-term trends could last between weeks and months.

Hence, the daily and weekly timeframes are best to spot them.

Minor to short-term trends last for hours or days.

They also appear on lower timeframes like 30m and 15m.

3. Best Time to Trade BTCUSD

The best time to trade crypto such as Bitcoin is in a bull market.

Here the price is rallying.

Technicals and a good number of fundamentals are in its favor.

You could scalp the BTC/USDT pair, swing trade it, or buy and hold for long-term profits.

Bear markets, on the other hand, are often harder to trade since price is often in a free fall.

This high volatility means pullbacks on profit targets might not be hit.

Final Words

Now that you know the best way to trade multiple timeframes alignment in crypto, carry out some practice.

This practice can be on a demo account until you’ve mastered this trading technique.

It can become an active part of your trading strategy and that means an increased potential for profit.

You’ll not just enter trades using one timeframe, confirmations will be gotten from a higher timeframe.

And that also reduces the chances of getting stucked in springs and upthrusts.

These are false breaks in the downward or upward direction which could leave you with underpriced or overvalued tokens.

Leave a Reply

Your email address will not be published.