An analysis of price going down. When a trader is bearish on a pair, they think the market will be heading down. A trader is a bear in the market when placing or holding short positions.
An analysis of price going up. When a trader is bearish on a pair, they think the market will be heading up. A trader is a bull in the market when placing or holding long positions.
A chart where each candlestick or bar represents one day.
A bearish trend that consists of lower lows and lower highs.
Short for “False Breakout” it is the occurrence of price moving out of a support or resistance only to return. This move targets impatient traders to jump into positions.
A tool used to follow the direction of the market by linking the lower highs in a downtrend and higher lows in an uptrend.
Uptrend is a rise in price which describes the direction in which the market is heading. When price is in an uptrend you will see it make higher highs and higher lows.
BeginnerEarly Stages For Beginners8 Topics
Forex Terminology11 Topics
- Major and Minor Currency Pairs
- Basic Forex Terminology
- Pips & Ticks
- The Broker & The Spread
- What is a Lot?
- Stop Loss & Take Profit
- Margin & Leverage
- Retracement & Reversal
- When Can I Trade Forex? Sessions - Market Open and Close
- 3 Types of Analysis (Technical, Fundamental, Sentiment)
- 3 Ways a Market Can Go (Up, Down, Sideways)
Margin & Leverage2 Topics
IntermediateIdentifying Scams2 Topics
Brokers for Beginners5 Topics
Technical Analysis13 Topics
- Types of Charts
- Understanding Japanese Candlesticks
- Candlestick Patterns For Beginners
- Single, Double & Triple Candlestick Patterns
- Support and Resistance
- Confluences w/ Candlesticks & Support & Resistance
- Counter Trend Trading/ Counter Trend Lines
- Moving Average
- Top-Down Analysis
- Consolidation Trading (Breakout, Retest, Continuation)
AdvancedUsing Indicators6 Topics
Technical Analysis (Part 2)8 Topics
Market Structure5 Topics
Fundamental Analysis9 Topics
CompletionRisk Management for Beginners8 Topics
Psychology for Beginners7 Topics
Personal Psychology Questions2 Topics
Starting from a higher timeframe and scaling down to lower time frames, is what we call “Top-Down Analysis.” Traders want to see the direction of a pair from a birds-eye view to determine the current trend so they look at the weekly/daily time frame. Once the trend is determined on the higher timeframe, they scale down to the 4H timeframe to look for any potential confirmation areas that confirm what the weekly/daily are saying. Afterwards, they may scale down to the hourly timeframes where they can find entry points. Scaling lower is good for counter trend lines and sometimes; super close/sniper entries (but you also may be prone to fakeouts).
Essentially, you are looking at the charts from top to bottom to come to a bias on whether you want to be a buyer or seller in the market. An example of how this would work is starting from the daily timeframe where you can see if the market is trending up or down. Let’s say you determine price is currently in an uptrend. After using a trendline to show where price is heading, you scale down to the 4-hour timeframe. On the 4 hour timeframe is where you may see price is currently bearish heading down to retest the trendline you drew on the daily timeframe. You then draw a counter trend line. Once the trendline is tested and the counter trendline is broken, you want to get a closer look at what price is doing so that you can find where you want to enter which can happen on a 1h timeframe. You can find a stronger entry from a 4H timeframe as well, seeing as how it provides stronger confirmation.
You can use whatever time frames you prefer to see structure. If you prefer to go higher, do it. If you prefer to go lower, that’s fine too. There are multiple ways to conduct top-down analysis.