Its has been quite a dialema that what price action. Is it a self-emphasis trader’s curse. Trading price action is something like analyzing top to middle level management and then the quality of the product itself telling the story.
Understanding top down analysis from reaction on timeframes
Top to down analyzation is meant by looking at monthly chart to see who is in control and looking to weekly determines the strength of the recent moves and daily is very good for entry level and nothing below that I have ever traded nor recommended.
Daily time frames downtrend or uptrend is most of the times is temporary as 22 daily candles consists of one monthly candle and imagine a powerful uptrend or downtrend on daily finish as a dozi candle on monthly.
We make things complicated by day trading isn’t we ? I hereby will help you understand the top to down trading analysis filtering the quality of trades that we must take.
As you see in the chart above,weekly trend is up. Several higher highs followed by fail to make a new low. Rejection at trendline tells us that price will probably look to pick up strength soon atleast on lower time frames.But still there has to be a reason to catch the reaction with entry which offers good reward. I still expect price to make a new high soon above 1.7600.
Lets look on lower time frame
Price reacted at support which is also the source of previous down move and it was also completely ignored in the upmove as we can expect weekly and monthly moves just use to ignore lower time frames orders and trading higher time frames use to wipe those whispaws from your trading. Take a look at the chart.