Multi-timeframe analysis
Day 14 of 26 · 8 min read · By DT Terminal
Multi-timeframe analysis means reading a higher timeframe for direction and context, then a lower one for detail. This lesson shows how timeframes nest inside each other, a common way to pair them, and what to do when the two disagree.
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Worked examples, the quiz and the interactive tools are in the app. Free account.
Three charts, three jobs
Every chart is the same market at a different zoom: four M15 candles make one H1 candle (Day 2). Read the market from the top down, and give each chart one job.
| Chart | Its job | The question it answers | Typical picks |
|---|---|---|---|
| Higher | Direction | Which way is the bigger trend, and where are the levels that matter? | D1, H4 |
| Middle | Structure | Is price at one of those levels, and is the pullback still going or turning? | H1, M15 |
| Lower | Entry | Where exactly is the idea right, and where is it wrong? | M5, M1 |
The higher chart sets the bias: higher highs and lows, lower highs and lows, or a range (the swings from Day 10). Mark the two or three nearest levels. The middle chart shows what price does at them. The lower chart is only for the entry: it shows the turn early, so the stop sits much closer.
One move on three charts
Worked example
Example 01: XAUUSD from D1 down to M5
The worked example, with every number walked through, is in the app.
Go deeper
The H4 chart shows the uptrend coming back to its old high, now the key level. H1 shows the same pullback as lower highs and lower lows into that level, then a shift. M5 shows the low at the level and a shift above the last lower high, well before the H1 shift prints.
The D1 swing runs from the higher low at 3,842.00 to the higher high at 3,968.50; the pullback is 63.50 of the 126.50 swing, or 50.2%. The M5 risk is 3,912.00 − 3,897.80 = 14.20, with the stop under the zone. The D1 high is 56.50 away (56.50 ÷ 14.20 = 3.98R); the H1 lower high is 19.20 away (1.35R).
The sizing: a 10,000 account risking 1% is 100. One lot of gold is 100 ounces on most brokers (100 per 1.00 move), so the M5 stop allows 100 ÷ (14.20 × 100) = 0.07 lots (99.40 at risk). The D1 stop allows 0.01.
How far apart the charts should be
A common rule of thumb is about 4 to 6 lower candles in each higher candle. H4 to H1 is 4, D1 to H4 is 6, W1 to D1 is 5. Too close, like H1 and M30, and both charts say the same thing. Too far, like D1 and M5 (288 candles in a 24-hour day), and you cannot find the higher swings on the lower chart.
The last step is often wider, such as H1 to M5 (12). That works; you just rebuild more of the H1 swing yourself.
Interactive tool
Timeframe stack checker
This interactive tool runs in the app, with your own numbers.
| Style | Higher | Middle | Lower | Steps | Typical hold |
|---|---|---|---|---|---|
| Scalping | M15 | M5 | M1 | 3 and 5 | Minutes |
| Day trading | H1 | M15 | M5 | 4 and 3 | Minutes to a couple of hours |
| Day trading | H4 | H1 | M15 | 4 and 4 | A few hours, often closed the same day |
| Day trading, wide last step | H4 | H1 | M5 | 4 and 12 | A few hours (the chart above) |
| Swing | D1 | H4 | H1 | 6 and 4 | A day to a few days |
| Swing | W1 | D1 | H4 | 5 and 6 | Days to a few weeks |
| Position | MN | W1 | D1 | About 4 and 5 | Weeks to months |
A swing trader's stack
A forex or gold week has five daily candles on most broker charts, which is why W1 to D1 is 5.
Worked example
Example 02: The same idea for a swing trader: W1, D1 and H4
The worked example, with every number walked through, is in the app.
When the charts agree, and when they don't
When all three charts point the same way, the trade is with the bigger trend, at a level, with a close stop. Most of the time they do not agree, usually because the lower chart is showing the higher chart's pullback up close.
H4 · lower highs and lows
M15 · higher highs and lows
On real charts: H4 has a last lower high at 1.0942 and a last lower low at 1.0815, a downtrend. On M15 its last few candles climb in higher highs and lows from 1.0815 to 1.0872, last higher low 1.0858. Same market, two trends.
DT Terminal ChartsEURUSD · H4Higher: downDT Terminal ChartsEURUSD · M15Lower: upWhat to do when they conflict
A common rule while you learn: stand aside until the charts agree, or reduce size and aim short of the next higher-timeframe level.
Interactive tool
Alignment check
This interactive tool runs in the app, with your own numbers.
Worked example
Example 03: EURUSD: H4 down, M15 up
The worked example, with every number walked through, is in the app.
The sizing
At 10 per pip per standard lot, risking 100 on the short is 100 ÷ (18 × 10) = 0.55 lots. The smaller long risks half the usual amount, 50: 50 ÷ (20 × 10) = 0.25 lots.
A top-down checklist
- Higher chart. Name the trend, mark the nearest levels, write the bias: "D1 up while above 3,842.00".
- Calendar. Check for high-impact news on the pair (Day 6).
- Middle chart. Is price at a level? Pulling back, ranging or shifting?
- Agreement. If the middle and higher charts disagree, stand aside or size down.
- Lower chart. Wait for your trigger; the stop goes where the idea is wrong.
- Room. The next higher-timeframe level is at least your minimum reward to risk away.
- Size and log. Size from the stop (Day 4); log the timeframes and the bias.
Practise it in the terminal
Check the Economic Calendar
Practise it in the backtester
XAUUSD with H4, H1 and M5 side by side. Write the H4 bias before you press play, and tag each trade aligned or conflict.Check yourself
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