From Ryan Schofield at Trade with Precision:

It is a common topic for myself and many other traders to discuss the importance of using multiple timeframes when making trading decisions. I put a great deal of emphasis on the daily timeframe however I don’t neglect the higher timeframes such as the monthly. In this post I would like to show you one of the ways I like to use the monthly timeframe in my trading.

Let me start off by showing you the monthly chart of AUDJPY:

20151021 twp1

The main points to express here are that AUDJPY monthly is in a down trend and is back retesting the underside of what has been a support and resistance level going back multiple years. This support/resistance level is still valid and has been valid each time price has retested it - the last time being earlier this year. Had I been looking at the daily time frame it is highly likely I would have missed this incredibly strong level.

Now looking at the daily chart:

20151021 twp2

It is clear from this timeframe that there is a stalling or consolidation of price over the past few days. If price was to break down through this range then the daily would also be back into a down trend and therefore agreeing with the monthly, possibly giving the heads up that the monthly support and resistance level is going to hold strong and selling may be increasing. Time to look a bit lower.

Here is the 4 hour chart:

20151021 twp3

I can now clearly see a flat level coming into play here. Sure it’s not yet a tradeable level for me yet since I don’t have a suitable place to locate my stoploss. I would love to see another test of the flat level and a lower high to confirm my stop position. This being the 4 hour chart and price being a fair way from the flat level, it may take a while for this trade to setup, if indeed it does at all.

I love trading this way, looking at the bigger picture and then watching and stalking the lower time frames for my reason to enter. It means I need to be working my watch lists to ensure I don’t miss the setup but this doesn’t worry me. On a chart like this it may take another day or 2 or it could possibly set up in in the next few hours. This gives me plenty of time to go fishing!!

It also means that if I am able to time my entry well (be patient Craig) then I may catch myself a 4 hour entry into a monthly move and that could end up providing me a good potential reward.

Have a great day!