[Side Story] Real Trade Analysis of MTF (Multi-Time-Frame) Analysis Practical Example
Hello! I am SAKU!
Until recently, we delivered a three-part introductory series on MTF analysis (multi-timeframe analysis / analysis across multiple timeframes),the introductory articlesin three installments,
and in a recent trade I found a setup that seems perfect for explaining MTF analysis, so I’ll explain it as well!
If you read the introductory articles and got interested in MTF analysis, this article will help you visualize it more clearly!
・Overview of the trade
First, please take a look at the image below.
What I will explain this time are the trades ①–③ highlighted in the red box on the above trading history screen (USD/JPY, short). These trades are roughly in the sense of day to swing trading with MTF analysis as the main focus.
All entry points are the same (i.e., entered with 1,000,000 units), but each is partially closed around points ①–③ on the chart.
Besides that, other trades would require explanations of different methods, so I’ll omit them this time.
※ By the way, the other methods refer to a relatively advanced original approach I call “MMS Analysis,” which incorporates candlestick price action, volume analysis, and market structure / supply-demand balance. I’m currently preparing a guidebook on this method, so please look forward to it!
Now, let’s begin the explanation of MTF analysis. First, let’s start with the higher-timeframe environment!
Note that lines drawn on the daily chart are colored yellow, on the 4-hour chart purple, and on the 1-hour chart light blue.
・Daily chart (higher timeframe) environment
Looking from the left of the chart, the daily timeframe overall was rising, but from the retracement high (around the yellow circle) it sharply turned down, the uptrend ended, and up moves were choppy and slow up until the point of entry.
If the retracement high is updated, it would enter a downtrend, but at the entry point the “update of the retracement high” had not occurred yet.
“Environmental recognition”
・Daily chart → Uptrend ends and downtrend begins as retracement high is updated (a situation with no clear up or down trend)
If this point is already unclear, please refer to the article on judging past trends!Past trend judgment articlePlease take a look!
Next, let’s look at the base axis timeframe, the 4-hour chart!
4-hour chart (axis) environment
On the 4-hour chart, up to the entry point (around the area of the “Line Break Expansion Diagram”), it appears to be in an uptrend at first glance, but it has not broken above the retracement high (the pink circled area). Also, unlike the daily chart, it has already turned into a downtrend.
In other words, this is a scenario where price is rising within a downtrend (a corrective rise).
Furthermore, since the 4-hour rising line (purple line) has been broken to the downside (“Line Break Expansion Diagram”), it can be expected that the corrective rise could turn into a decline.
From around here I watched for a short entry timing.
By the way, the rising trend line on the right shoulder of this 4-hour chart is not a“uptrend line”so please note. The terminology is flexible, but if your line definitions (what you look for and for what purpose) are vague, its usage also becomes vague, so be careful! (Details on this are inThe Secrets of MTF Multitimeframe Analysis, so please refer there.)
“Environmental recognition”
・Daily chart → Uptrend ends and downtrend begins as retracement high is updated (a situation with no clear up or down trend)
・4-hour chart → Downtrend in progress, assume completion of the corrective rise
Next, to determine entry timing, let’s look at the lower timeframe (1-hour)!
1-hour chart (lower timeframe)
On the 1-hour chart, after the area labeled as a short entry, the 1-hour level rising line (blue) broke to the downside and a return move occurred.
If you’re wondering what a return move is,past articlesplease refer to.
・Daily chart already shows an uptrend finished,
・On the 4-hour chart, a downtrend has already begun, and additionally the expectation is that the corrective rise will end and price will resume falling,
・A return move has occurred against the 1-hour rising line
With all of the above in mind, I entered short at the area labeled as a short entry.
My stop loss at that time was set a little above the 1-hour rising line, about 30 pips.
・Partial profit-taking
Afterward, price fell smoothly,
Regarding partial profit-taking,
① → 39 the 4-hour chart horizontal line (purple dotted line near point ① in the upper image) showed a rebound
② → similarly the 4-hour chart horizontal line (purple dotted line near point ② in the upper image)
③ I planned to let it run as much as possible, but I exited when I saw a long lower-shadow candle on the daily chart near the bottom of the image.
Also, since I had already moved the stop to breakeven at point ①, I avoided a losing trade at that point.
In terms of gained pips and risk-reward, they were respectively
① → ≈85 pips / risk-reward ≈ 1:3
② → ≈300 pips / risk-reward ≈1:10
③ → ≈583 pips / risk-reward ≈1:20
That’s how it turned out.
Personally, I’d say it came out reasonably well.
・In closing
So, as a bonus, I explained a practical example of MTF analysis based on real trades!
If you found this content difficult, want to learn from the basics, or would like to study other entry patterns, stop losses, take profits, and money management in more detail, please be sure to check my trading method via the links below!
If you want to learn MTF analysis and line analysis from basics to achieve more advanced and reproducible trading, check this out! ↓
The Secrets of MTF Multitimeframe Analysis
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