Essentials to Market Structure — The keys to multiple Time Frame Market Structure
The keys to multiple time frame market structures are rather simple. Where you should focus?
Your focus should be on the highest time frame of the three frames. Trades will be managed by the highest or mid timeframes in other words if you are a swing trader you gonna be utilizing that daily timeframe to manage or the H4 chart to manage your trade, but the daily is going to be utilized to facilitate the trade premise and orders that are going to give you your directional bias.
The market structure that is on the daily chart, that's framing your swing trades, once you get into a trade you will be managing that trade, on an H4 time frame, and you will just use the respective time frames we talked about in the previous post, and then your H1 chart will be used for timing purposes.
So the shortest timeframe regard to swing trading would be the M60 chart. So your entry signals would be derived from having studied the market structure on the daily and the H4 then your H1 chart was facilitate the specific entry point, so you know what you do in the entry concepts and techniques on the H1 chart for swing trades.
The highest probability trades are made in the higher time frame direction, now there are going to be instances where the higher time frame premise may be bullish but you are approaching a key resistance level so that may be trumped.
So, that’s where we gonna go back to the core essentials to technical analysis that being support resistance trumps everything, without the understanding about key support resistance levels, you are not gonna get to a directional bias regardless of what trading model you using, position, day trading, whatever it is if it is not framed on the key support resistance levels, it’s probably going to be a struggling point for you as well. So, you have to go back to the core essential to my concepts and just sound trading altogether.
Key support resistance levels are where it is all about. Without those, all these lines and all those procedures that we are going to be covering here or we gonna cover later posts, that are gonna no good to you, if you do not know how to do this, look at my previous posts about swing points.
So you have to understand what is a key support resistance level. So if you are looking at the highest time frame for your particular model, that will hopefully draw your attention to whatever ket support resistance level at that point in price action obviously you can always go up to a daily and weekly just as, if you just look at those daily, weekly in terms of support resistance, for whatever the time frame you trading, those will be helpful to you.
Now, let's talk about the market structure (again?)
Well, if you look at a price rally up and then price hitting a major resistance level, we are gonna assume for a moment that this is your highest time frame, keep it generic because you can apply this technique what even your higher timeframe is based on the model traded you are aiming to be.
As price rallies up into we perceive as a higher level, key resistance level, the price never moves in a straight line, so there is going to be a consolidation, a price move up another consolidation, a price move up, and then as price makes it into this resistance level, then we will be anticipating a reversal, so the market structure break down taking out short term swing lows in here,
This short term swing low, when the highest time frame, for your particular trading model, once that breaks, this would be the catalyst for you to say okay this is probably gonna be another trade entry,
based on the higher time frame chart of your profile.
For example, let us say that this is the monthly chart, and you are looking for a position trade, and monthly hits the key resistance level like this, and it comes down takes out a short term low in a monthly, and we now know the market structure has broken, so we have a market structure shift right here,
Once this structure has been broken, but as the price starts to rally up, we don't anticipate science a breakthrough this resistance level, if we arrived at this possibly resistance level, we will expect a retracement until trade entry but then we would zoom in in this area right there, then we will enter a weekly timeframe to a shorter-term time frame price levels, and then, by zooming in we would possibly see a shorter-term optimal trade entry or respective sell pattern to convince us even farther that this is probably going to be a selling scenario.
If we move down into a daily and see something even similar to that, you would have all these nesting confluences of implied resistance levels once a higher timeframe market structure has been broken down then we would be able to position ourselves in sync with a top-down approach with market structure.
Again, let’s look at the chart,
This is how the market structure builds, this is a price rally and a decline.
And also we have consolidation,
If we would expect to see some kind of rally in here something is bullish, that we would expect to support at the bottom of the consolidation area.
We would like to see bullishness, support being held, resistance being broken, then that is the signal we want to see.
And every time price starts to pull back and retrace in here, the market structure concept that you would be utilizing would be to simply look for optimal trade entries,
For buys, you would be looking for reflections to buy, you would be looking for type 2 trend following, bullish scenario, so in other words, in the chart, you would be looking for price finding support and resistance being broken. That’s the whole framework behind the market structure.
Ok, but here is another important notice,
If the price started to break down, be comfortable with the price coming back and blowing out previous lows here (as above red), there may be an important load that’s broken place, and trailing stop-loss orders would be trailed up blow that particular point, so if prices dip back down, all that’s going to do is give you another opportunity to get long.
If price continues to maintain support and breaks above all these short-term highs in here, the market structure implies that we could possibly see a leg from a low to high, duplicated on the retracement.
The same thing could be said with the market, declines, and reversals going long, every time when we see consolidation, consolidation you wanna study these, for shorter-term more dynamic support resistance levels, these areas are more easily tradeable because they have discernible price levels they are very clear, we don't know how it’s going to take a price from these consolidations to the next consolidation, we don’t know that, we anticipate that grey area, that’s missing on the above charts, the parts grey, are missing, actually that does not matter.
And the process for the bullish scenario is almost the same.
As the price starts to retrace every time, it retraces we are looking for new selling opportunities (as shown in the above)
But if we see a previous swing as we see here in the red line, is taken out (broken down), if we get a retracement, or another additional sell signal, this is where we use swing projections.
Just on price, we are not using Fibonacci, you can, but just looking at simple price action alone, the low to high, once it is broken, you can start taking the same measurable swing (the higher) and project it lower.
What do we expect when we see mid-term highs and lows?
A mid-term high is obviously a high that has lower highs on either side of it,
And you can get mid-term lows, that have two higher lows on either side of it,
It is very easy to see and when you see those, note them, whatever it is you use to identify it, that is your way of doing, but it is important to understand where they at,
and when they started to nest out like this, you can classify in the midterm to know long term, because if we have lower highs on either side of it, this will classify as is a long term high, that will also allow you to expect to see much longer-term price swings, so by nesting out and marking off your swing highs and swing lows on your respective timeframe, you start to build the framework that needed to be able to decern if you are in a midterm or short term price swing and within your market structure.
We can also find the leg by looking at those midterm price points,
And as we can see easily it is duplicated.
Let’s see you in the next post about kill zone — time and price theory.
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