Momo or HTF?

[Caseynotes]

Which is better, using a momentum indicator (or 2 or 3), or just using a higher time frame to show price flow?

 

A momentum indicator is supposed to keep you out of bad trades but it’s no good if it also keeps you out of good trades.

 

The best entries are after a failed dip in a trend but most momo indicators turn down just as the dip reverses back up to continue with trend, exactly where you should be getting in. Fast momo indicators such as stochastic just follow behind the price action that is plainly visible anyway

 

So have 2 charts running but keep it relative, if working a 15 min then watch the 1 hour, if working the 1 hour then watch the 4 hour or daily, work the daily and watch the weekly.

 

Don’t bet against your step-up time frame, only take set-ups in the same direction.

 

Momo indicators can signal waning enthusiasm for higher highs (or lower lows) and the prospect of a major reversal but can equally deceive, after a strong push continues, but not as strong, upward movement will register as decreasing momo.

You should get into an upward channel after a spike up, in spite of the inevitable descending momo.

 

Using a higher time frame is a better visual guide to momentum than momentum indicators, unless you know a predictive one?

 

[donaldprice]

The higher time frames show true reality of direction of trend and filters out all the noise. Indicators can be useful, but overall incorporating fundamental and technical go hand in hand. 15m are great for entries daily 4h are best for analysis. 

[Caseynotes]

I must admit I like the 4 hour as well, it's great for drawing up levels and trend lines. I tend to look at the daily specifically for a 'special candle' at a 'special level', at the start of the next day there can often be a price reaction to it. I still use the 1000 tick chart for entries, I think it runs smoother, speeding up during high volatility and volume then slowing down to iron out dull over night sessions, it tends to vary between 20 min and 5 min. The problem with any tight time frame is getting lost in the overall action hence keeping an eye on a longer time frame throughout the day.