For example, if you trade on the 15mins time frame (tf) then watch the 1hour (tf) for what's happening in the longer term. If you trade on the 5mins then watch 30mins, as that's the closest. Often times when we do this, we see that the longer term may show bullish indicator signal while the shorter term show bearish indicator signal. The contradiction gives us reason to pause and wait for all signals to align before pulling the trigger on a trade.
I found it to be true also, that whenever indicator signals align, there are more chances for the move to be stronger.
But I have also found looking at closer timefram helps. For example if you trade on the 15mins tf, look at 5mins, 15mins, 30mins and 1hr tf for clues. Wouldn't the indicator contradict each other and add more confusion then you ask? Yes it would.
What IS consistent however should be the price action (and remembering that all indicators are lagging). Afterall the summation of 5min will give the 15min and the summation of 15min will give the 30mins and so on and so forth.
So while the indicator may contradict, the price action in different time frame forms a stream of continuous information, painting a consistent picture throughout.
Knowing this is advantageous to us because
- We are also able to perceive price as a continous flowing story, instead of snap shots taken in the 2 time frame.
- As a result, giving us more understandnig and clues as to what is happening
- And that, hopefully, translate to good pips