Trading multiple time frames

 On my last Wednesday post i shared a trade idea on USDCAD. In short my trade idea of imminent USD strength was right-ish  but I still lost money on this trade because I was early. So, I thanked the market for stopping me out and started watching 1h and 4h charts for signs of reversal. Finally on Monday 17 Oct,  AUDUSD reversed after testing important resistance at 1.0345-70 (see the red line on a Daily chart - right section).   The signal came with a shooting star on 4h chart - left section

 I do not normally take trades based on candlesticks because early on I learned that trading based solely on candlesticks will deplete my capital real fast. So, I use candlesticks in conjuction with classical technical analysis (support, resistance, trendlines,etc..). In this case, AUD reversed from major resistance with a bang and that was good enough for me. The target was 1.0118, confluence of 23.6% Fib resistance and daily 50MA (200MA on 4H) which AUD duly reached breaking the short term uptrendline in the process.

The next day i warned about a bounce in majors vs USD which came later in the day (usually I am wrong :) ). First short when AUD came back to test the resistance was a good trade but my tight stop loss was hit. Then AUD tested the trendline once more and only after it was rejected (the first white candle) did I put on the short again. The scenario that I had in mind was ABC correction with a minimum target of 0.9980 and 0.9910 at best. Instead, we had a bullish engulfing candle and consequently I moved the stop loss just above it. When the engulfing candle was followed by an ever tightening range I knew I was now looking at 50-50 trade. Further drill down to 1h showed AUD was in a symmetrical triangle:

 So I moved my stop loss lower and entered reverse buy stop order in case AUD goes up. It then went up and i was now long. I did not wait for it hit the target as implied by the triangle since god knows what will European leaders decided on over the weekend. When AUD reached the green line that was good enough for me.

I do not know what to expect next week re AUD but on a weekly chart we have a bearish Hanging Man while on a daily chart we just made a new high breaking out from the 5 day range. Still, AUD is poking its head at a significant daily resistance. Mixed signals here and so we wait.

LESSON: do use multiple time frames starting from weekly all the way down to 1h to generate a trade idea, to time that idea and to place a stop. If the trade stalls or market not behaving as planned, check shorter time frame ( i usually stop at 1h chart) to decide whether you need to reassess your trade. 

P.S.  Trade idea for the next week. AUDCAD broke to the upside from the 5 day range and it looks it is ready to roll. I would be willing to buy at 1.0468 (above highest high of the range) and put a stop at 1.0360. The only bad news is this pair can stall anywhere betweeen the 1.0515/50 range where previous 3 tops were made.