Analyzing the flow of the charts

Flow of the chart means to use the natural progression of the technical chart to anticipate the eventual out come of the trade.How can you tell the direction is going short or long?The first thing that you must understand is that all charts no matter what time frame you are viewing are building in the same manner with no exceptions from the 1 minute to the 1 month.By paying attention to the indicators you are able, for a short time, relative to the chart you are analyzing, you may be able to anticipate the short term out come, this work very well when anticipate the one hour trade plan , what I mean by “short time” and “short term” is the candle that is building on the higher chart possibly the following candle.Never any further then that.You must have in your indicators a way to tell over all direction I use 10, 20, 50, and the 89 EMA’s, you may use the EMA’s that works best for you. You have to understand what the EMA’s are telling you .When looking for and entry the EMA’S can help, if you are going long and you are close to a 10 EMA on the day chart you may want to wait until the price has broken the day chart 10 EMA point.Most of the time when the price hits an EMA on a higher chart the price will take a draw back, this draw back can cause you to get stopped out, depending on your stop loss setting, to prevent this from happening to you, first don’t trade if you are close to a day 10 EMA until after you have passed it. Same with the 4 hour chart 10 EMA and the price trend line.Let’s take the same situation and find out how we can tell if it will break on through or if the 10 EMA of the day is the turn around point.You must remember that the higher the chart the more solid the resistance or the support is.Note:(For instance the 15 minute 10 EMA or trend line is much easier to break, then the 30 minute the same applies as you go up in time frames.30 easier then the 1hr. 1 hr easier then the 4 hr, 4 hr easier then the day, day easier then the week ,week easier then the month this is particularly true when you are in a one our trade plan trade)You will be looking at the 4 hour chart first (remember that the day is close to the 10 EMA and we are looking to go long.Note:If the EMA’s on the 4 hour are consolidated it makes it a little hard to find direction,With that being said, if your EMA’s are starting to spread to the long side on the 4 hour chart, then the evidence is there for your day to continue long.(BUT it is not guaranteed)Now we need to validate the trade, when using any trade plan you must have a way to validate the trade the way to do this is look back at the 1 hour chart you are looking for two main indications on the 1 hour chart. The EMA’s need to be spreading apart to the long direction, the wider the better, this will give you an indication that the 4 hour and day may continue long. The other indicator you are looking for is the CCI to be at the bottom (over sold) of the scale.Why are we looking at the CCI?If the CCI is at the bottom of the scale then there is more of a chance for the price to go up rather then down. We are going to want to have this to be true also on the 30 minute chart.Now that we have all that checked out and all of our charts are showing that we have more of a chance to go long then short, then we can be more comfortable about staying in a trade that is going to hit the 10 EMA of the day chart.Note:If the 15 minute has the EMA’s spread wide and the CCI over sold heading long this will help to confirm this move going long.Now let’s look at how to tell that the price is going to possibly turn or draw back to the short, at the 10 EMA of the day chart,Again you start with the 4 hour chart and find out the attitude of the EMA’s. Just for example sake lets say that we are using the one hour trade plan and the EMA’s are just starting to brake to the north and the day is right up against it’s 10 EMA. So far the 4 hr and the day are telling you that it MAY continue long.Let’s validate the trade.We go to the 1 hour and see that the 10 EMA is now starting to curve down and the price is candle is below the 10 EMA on the 1 hour chart this is an indication that the move to the long is possibly slowing or is drawing backThis would NOT be the time to enter a trade going long.If you go on back to the 30 minute and see that the EMA’s are crossing over and heading short and spreading apart, Which is going the opposite direction of the 4 hr and day there is more of a chance that the 10 EMA of the day is the turn around point, and it is going to at the very least draw back the current day candle, back to a previous price. You would want to wait until it finishes that draw back before you try to go long again.Note:You may want to at this time start to evaluate the possibility of going the other direction (short) and start looking for an entry using the validation process making sure that it is not just a pull back to the 4 hour 10 EMA.The 15 minute and the CCI of all the charts can help to identify the pull back on a higher chart or the return to the trend.The CCI is important to the evaluation and you have to evaluate it on each time frame individually.You can get an idea of the more likely direction if you are looking to go long and all the CCI’s on all lower charts are at the bottom (over sold) of the scale then you have more of a chance to go long. If the CCI’s are at the top (over bought) on all charts except the 4 hour or day then there is a real chance that the 4 hour and eventually the day will retrace or pull back.Note:(You can not anticipate direction by looking at the CCI only it lags too much).Note:This is important when you combine the EMA direction with the CCI direction when they are agreeing with each other then the stronger the move to that direction.If the CCI is going down and the EMA’s are going up depending on the spread of the EMA’s then you may only be doing a pull back on that particular chart and not a change in direction over all.Recap:The technique is based upon the fact that the charts are all built in the same manner and they are all built from one formula base on tick data. To explain a little more this is how the charts are built.Tick data is compiled to build the1 minute candle. It takes five 1 minute candles build the 5 minute candle. Three 5 minute candles build the 15 minute candle. It takes two 15’s build the 30 minute candle. Two 30’s builds the 1 hour candle. Four 1hour candles build the 4 hour candle. Six 4hour candles to build the day candle. Five 5 day candles build the week candle, 4 week candles to build the 1 mouth candle.You may ask why did you go through all that ?The reason is once you understand the way candles are built then it is easy to see how you can look at the lower charts and see what the upper charts may do. Also be able to see the one hour trade plan develop.I hope that this is going to help you when you analyze the charts.Thank youJ. W. Stapleton