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Technical Analysis Topic:
CONCEPT OF CROSS REFERENCING
Let's talk about the concept of cross-referencing, or analyzing one time frame
with another time frame to compare and contrast trading possibilities. We will
illustrate this concept with a simple analysis of a European Futures contract,
Dec 03 EURIBOR, trading on LIFFE.
When you start cross-referencing your analysis start with a higher time frame.
Work lower in time, downward in direction. Never start analysis from a lower
time frame and then work upward in direction! Doing so can create more
potential for mistakes and add to chart confusion.
What time frame to start with can be open for debate? I always start any analysis
with a monthly chart. Sometimes it is only a glance, but when done will reissue the
chart to a weekly time frame, reapplying tools/studies. When the weekly work is
completed will then reissue the chart to a daily time frame. The analysis continues.
Finally we enter a cross-referencing phase that could find any combination of
variable time frames being analyzed.
We are not trading the monthly. We are just using that time frame to best define the
previous long-term historical price perspective. We observe where are previous price
pivot areas located, and where the major high and low are located. We check out
retracement and possible wave relationships to identify if they conformed in the past.
If they did it serves as an indication of the future potential performance ability.
Move [re-issue now] the monthly chart to a weekly chart time frame.
Continuing to reapply weekly studies with the monthly analysis adds further insights
into the combined support and resistance areas.
Move [re-issue now] the weekly chart to a daily time frame. Apply more analysis to this
daily chart. This new daily work builds further on the monthly and weekly support and
resistance understanding. Each new layer of analysis adds greater clarity to the trading
potentials, and possible risks we can better anticipate now as close in on our target
trading time frame.
Move [re-issue now] the daily chart to a variable time frame. Normally we instinctively
check out the hourly variable time frame next, but what to do when the hourly time frame
does not transfer well Elliott wave count or other technical analysis synergies?
Here is something you may not hear from others. If you are attempting to cross-reference
directly a daily to hourly chart and there is confusion, consider adding intermediary variable
time frames. When I wish to do a complete cross-referenced analysis I review any of the
following time frames: M, W, D, 480, 240, 180, 120, 90, 60, 45, 30, 15, 5, 3, or 1 minute chart.
This is really only a sample illustration of what the concept of cross-referencing is about.
It is quick example of how cross-referencing different time frames together can help you
better interpret a possible trading opportunity coming your way.
CONCEPT OF CROSS REFERENCING
Let's talk about the concept of cross-referencing, or analyzing one time frame
with another time frame to compare and contrast trading possibilities. We will
illustrate this concept with a simple analysis of a European Futures contract,
Dec 03 EURIBOR, trading on LIFFE.
When you start cross-referencing your analysis start with a higher time frame.
Work lower in time, downward in direction. Never start analysis from a lower
time frame and then work upward in direction! Doing so can create more
potential for mistakes and add to chart confusion.
What time frame to start with can be open for debate? I always start any analysis
with a monthly chart. Sometimes it is only a glance, but when done will reissue the
chart to a weekly time frame, reapplying tools/studies. When the weekly work is
completed will then reissue the chart to a daily time frame. The analysis continues.
Finally we enter a cross-referencing phase that could find any combination of
variable time frames being analyzed.
We are not trading the monthly. We are just using that time frame to best define the
previous long-term historical price perspective. We observe where are previous price
pivot areas located, and where the major high and low are located. We check out
retracement and possible wave relationships to identify if they conformed in the past.
If they did it serves as an indication of the future potential performance ability.
Move [re-issue now] the monthly chart to a weekly chart time frame.
Continuing to reapply weekly studies with the monthly analysis adds further insights
into the combined support and resistance areas.
Move [re-issue now] the weekly chart to a daily time frame. Apply more analysis to this
daily chart. This new daily work builds further on the monthly and weekly support and
resistance understanding. Each new layer of analysis adds greater clarity to the trading
potentials, and possible risks we can better anticipate now as close in on our target
trading time frame.
Move [re-issue now] the daily chart to a variable time frame. Normally we instinctively
check out the hourly variable time frame next, but what to do when the hourly time frame
does not transfer well Elliott wave count or other technical analysis synergies?
Here is something you may not hear from others. If you are attempting to cross-reference
directly a daily to hourly chart and there is confusion, consider adding intermediary variable
time frames. When I wish to do a complete cross-referenced analysis I review any of the
following time frames: M, W, D, 480, 240, 180, 120, 90, 60, 45, 30, 15, 5, 3, or 1 minute chart.
This is really only a sample illustration of what the concept of cross-referencing is about.
It is quick example of how cross-referencing different time frames together can help you
better interpret a possible trading opportunity coming your way.