Monday 20 April 2015

GBP/USD: Conflicting Signals



I have always said that I prefer making my trading decisions based on the Japanese candlestick formation signals. What happens, however, when I see conflicting signals on different time-frames? For example:



As you can see for yourselves, on the four hour filter chart there is a very well-formed doji candlestick above the support that indicates a movement to the upside, while on the daily filter chart there are a hammer and a doji candlestick under the resistance that that indicate a movement to the downside. The question is, which signal is the correct one? I, personally, tend to believe the candlestick formations on the longer time-frame, i.e. the daily filter chart, although I remain wary of unpleasant surprises. Of course, in a situation like this one can always simply take a look at the shorter time-frames and use a suitable scalping strategy.

3 comments:

  1. Very good article. Longer candlestick formations (time-frame) are more important.

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  2. I agree with the analysis, good point.

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  3. You've raised a very interesting question.

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