Why I look at different timeframes

Posted by downtowntrader | 10/24/2005 01:00:00 AM | 2 comments »

This is a perfect example of why it is important to look at different timeframes to increase your odds of making a succesful trade. At first glance, the VPHM chart doesn't really look that exciting. Yeah, it's on support and volume is diminishing, but MACD is bearish and stock looks like it may go either way.

If you look at the 60 minute chart over the last ten days, it starts to look a little more promising. That's a beautiful contracting triangle and it's testing the upper trendline for the third time. A lot of things in this market work in threes and usually the third test of resistance is the most important. Also, triangles are resolved in 5 waves several times, and this looks like it may be ready break the trendline.
When I look at the intraday 5 minute chart... I see a downtrend channel that was finally broken. Look at how the volume finally increased towards the bottom of the channel, and then after breaking the 200 bar ema, it came back for a retest, and then the volume really kicked in helping it reclaim the 200 and close near HOD.

I think if you put these three charts together, the evidence suggests that the probability for vphm's next move should be up. However, there are clear places on the 5 and 60 minute charts where you can see a breakdown before having to wait for a test of the 50 day sma, etc. Good Luck,



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