How do I do a top-down analysis before taking a trade?
I look at one chart and the trade looks great, then a bigger chart shows the opposite. How do I avoid that?
For education only. This is not financial advice. Trading carries a high risk of loss.
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1 Answer
Best answer
Start on the highest timeframe you use and move down.
- Weekly or daily: what is the overall trend, and where are the major levels?
- H4: is there a pullback or range near one of those levels?
- H1 or M15: is there a clear trigger, such as a break and retest or a reversal candle?
Only take trades that agree with the bigger picture, or at least are near a strong level. Write the bias on top of each chart so you do not change your mind with every candle.
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