Time shifting is understanding what time frame has current control of the trend. The difficulties of trading is knowing how to use time frames to your advantage. As we’ve learned thus far, you want time frames that are complimentary to each other in detail, from low to high. And that price is always under the influence of the longer time frame trends. What does that all mean?
Complimentary Time Frames
Complimentary time frames is critical for scalpers and for any other trader for that matter. It allows you to not only see, but also understand the near, intermediate, and tertiary trend. You want time frames from low detail (longer time frame), to high detail (lower time frame). Why?
Longer Time Frame Controls Price Action
Price as we know is alway under the influence of longer time frame trends. Many will say, “Well I understood the trend, I went long (or short), because the longer term trend said it will go up, but then the price went the complete opposite and blew me out before going to my target.
It really doesn’t matter if the person was scalping or playing a longer trade. This scenario happens all the time. It isn’t because the person was wrong in the direction of the trend. It is just because of execution placement. Let take a few examples.
From this daily chart we can understand by 7/1/2010, the accumulation has been set. Since we understand accumulation is set, we know to go long. Longer term trend is set. Not a bias but a completely sound technical understanding. Low detail perspective.
Low Detail
What does that mean low detail? It took 1 whole day for these candles to form. If you went long inside or even at the open of these candles from 7/2 and on, would you safely say that you would not suffer a draw. Just take a look at the range of 7/6 or 7/7’s candles. This is what people don’t account for, it is how the candle will form.
What can we understand from this chart then?
2 things:
- Momentum is set to the upside
- Accumulation based on price action is set and we expect the price to move up. The move is going to the previous support lost. 1070.50 then to 1090.75 then to 1110.75, provided momentum holds up.
Will these movements change the trend? No. It may but not until it reclaims the previous support lost back up at 1192.50 and then pass the previous high at 1216.75.
Moderate Detail
When we investigate further into this potential accumulation play, it seems that today. We may see 1092.00/75. Achieved more detail than the daily. And momentum is starting to turn.
More Detail
To get there we need to break through the levels at 1086.50, then 1086.50, 1089.25 and hey we may even get to 1095.50/75 for the huge inverse head and shoulders.
But what we are also gathering is that momentum has slowed and is setting up for a correction already. What are those levels I mentioned? They are spots to look for resistance. Some are not major levels and some are. If you play them against the tick charts, you will notice how significant they can be.
Longer term, we are under the influence of the daily trend to go up But as you know, the market doesn’t really travel in straight lines. It zig zags it way up. From low to high details, you gather the longer term significant levels, and then you break down the action to understand what are the levels inside that range that will affect the price action.
The more the details you get, you can limit the draw down you would potentially experience by not going long at resistance and then short at support when you based your trade off a longer term perspective. Time shifting dictates you go from low detail (longer term time frame) to understand the move, and you shift to high detail (shorter term time frames) to get your entries.
There is a lot more I can say about this topic. I think, I’ve given you enough to extrapolate the rest. It is up to you to think through them.