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Stochastic in multiple time frames
Just wondering, my trading plan involves support and resistance, trend lines and stochastic. I trade using Daily (for main trend) 4 hr to get support and resistance line and 1 hr to confirm those line and enter. Obviously if the trend is up on daily and resistance breaks then I will enter long. I'd like to add stochastic in there as a bit more of a confirmation.What id like to know is how I interpret it over the 3 time frames. For a long trade for instance, is it best that the daily is in overbought conditions, then once price breaks resistance on 4 hr it moves out of overbought (possibly half way) and starts moving up to oversold. And what should I look for on the 1hr or is it not that important as it moves so much between the two points.What throws me off, is when the 4hr stochastic is going one way (say up) and the daily is going the other (down).Any help is greatly appreciated thank you
about 1 year ago
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From my observations, the stochastics are usually in their extreme levels in strong trending situations. Also, the stochastics are often 'overbought' on breakups while they are 'oversold' on breakdowns. If you're playing the retracements, on the other hand, its best to sell(buy) the pair when it corrects back to any of its Fibonacci or any previous support(resistance) level and at the same time the stochs are also overbought(oversold).
No single trading technique, however, will give you a 100% winning mark. Like you said, the stochastics, for example, give different signals on different time frames.
about 1 year ago
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Answers (1)
Why don't you try focusing on just a couple of time frames so that you don't get mixed signals from the stochastics? For instance, you can confirm whether the long-term trend (based on the long-term time frame) would continue depending on whether the stochastic is still moving towards overdone. For example, if there's a downtrend on the 4-hour chart, this downtrend could continue if the stochastic is still moving towards the oversold area.
You can then combine this with analysis on the shorter term time frames by looking for possible retracements. If you want to jump in on the downtrend, you can wait for a retracement and for the stochastic to reach the overbought region before going short.
about 1 year ago
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