Forex Top Down Analysis in Forex Trading?

[moonchild]

Top down Analysis is the art of using different Time-frames to analyze the market, as a trader you shouldn't see the market from one single perspective, it's important to pay attention to other aspects, it'll help solidify your analysis and also give you confidence while trading, in a top down analysis you start analyzing from the top daily chart, if you're a day trader.

Plot the chart and then move to 4 hour and analyze it too using price action and then down to one hour and from then you can move to your trading timeframe to place your trade.

What's your own experience with top down analysis?

 

[Nite]

By using more than one time frame in your analysis of the market, you will be able to have a better understanding of the general trend and possible price movements. Commencing on the daily chart helps one to recognize crucial support and resistance levels as well as major trends which may be affecting price action. Most importantly, top-down analysis enables you to trade with more knowledge because it considers different views. You are also able to confirm your predictions by looking at it from various angles hence increasing confidence in trades.

 

[FinTrader]

On large timeframes you can see the direction of the general trend and significant levels. Therefore, I always start my analysis with such time frames. And on smaller timeframes I’m already looking for more profitable entry points into the market, where I can set a small stop loss.