Use Multi-Timeframe to Improve Your Trading Strategy

In times of extreme market volatility, some traders, particularly those with limited experience, may find it difficult to identify a suitable point of entry to open a position. 

One of the easiest tools in any trader’s toolbox is multi-timeframe analysis and the concept of “mix & match”. We’ve already outlined some of the key uses of multi-timeframe viewing and multi-timeframe analysis in our earlier articles (The “Ins and Outs” of Multi-Timeframe Analysis for Beginner Traders and Using Multi-Timeframe Analysis to Identify Market Trends and Opportunities). 

Today, we’re going to show you how to identify trends and opportunities using a tactic we like to call the “Mix and Match” trading view. 

Should I go long or short?

When the crypto asset market experiences high levels of volatility, you might find it challenging to identify any positive short-term trends for BTC/USD. You might even begin to question: When would be the best time to enter? If I can’t spot any viable trends, should I go long or short? You might find yourself spending hours upon hours observing market movements before finally making that call. 

If this sounds like you, don’t worry, you’re not alone. Here are some tips and day trading strategies that might make it easier for you to start trading.

Instead of spending hours on end going through multi-timeframe views, try taking a more systematic approach. For all of you budding day traders out there, the first step would be to assess and analyse any micro-movements over a set time period. 

Many day traders tend to select a 15-minute timeframe view as a starting point, especially in times of market volatility. This view would usually give some indication of current market performance. 

Let’s take a look at the following chart with the 15-minute timeframe view set up. 

As you’ll see in the image, BTC is experiencing a steady decline with a steep drop-off, signaling a downward trend. The last three candlesticks indicate that the market price has dropped by around 5%, from $8,687 to $8,275. 

The key takeaway here is that all indicators point to a high probability of a downward trend. But let’s see how true that really is, and if our instinct is right at the point. 

Again, let’s look at the market using the 15-minute timeframe view to see market movements over the next 6 hours:

Immediately, we see that our hypothesis was off, and by some mark! What really took us by surprise was that $8,275 was the lowest point. The price continuously increased the following 6 hours, reaching $8,828, contrary to the expected downtrend signal released by the 15-minute chart.

Now, let’s use the one-hour timeframe view to see if we can corroborate the market trend.

From the figure above, it’s clear that the price of BTC has dropped from almost $10,000 to around $8,150, and then gradually increasing before dipping again. The one-hour chart gives us a wider perspective of the market and market movement. 

At the current point, the price of BTC is at $8,275, which is a short-term low. Will the price continue to fall or will it rebound?

From the daily chart, we can see that the price of BTC (as indicated in the red box) made its way back to the moving average, and even shifted beyond that line.

In the 5-minute chart above, all signs point to BTC’s price dropping to $8,275. The RSI indicator has also fallen to 16.9, stipulating that the market is overwhelmed by short orders. As such, we’d make a calculated assumption that there is a high probability of BTC’s price rebounding.

As budding day traders, it’s important to make informed decisions before opening a position and entering the market. By looking at the market with a single timeframe view, you’ll only see one side of the picture. That’s why multi-timeframe analysis is so important and one of the most valuable tools available to traders. If you adopt a more methodical approach to your trading and adopt a multi-timeframe approach, you’ll be in a much better position to structure your trading strategy. 

To open an account on Bybit and begin trading, click here .