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Use Multi-Time Frames as a Doppler Radar for Stock Price Trajectories

Posted on Thursday, January 16th, 2020 by Jea Yu

Trying to forecast stock price targets is a perpetual work in progress. Whether using quantitative valuation models, fundamental research or technical analysis, the goal is always to try to answer a simple question, “Where is the stock price going?” Utilizing multiple time frame charts can help improve the accuracy of forecasting price trajectories when specific patterns develop. Generating a doppler radar effect works with both swing and intra-day trading when triggers converge. The trick is using the wider time frames as the doppler and executing with the smaller time frames with triggers. Targets can be forecast with various indicators.

The Doppler Effect

Don’t mistake forecasting with predicting. Forecasting deduces outcomes by extrapolating high probability patterns while predicting is akin to guessing. It’s like using a doppler radar versus pulling a number out of a hat. A doppler radar provides a full broad view of geographies to accurately forecast trajectory of weather conditions which will likely materialize locally. Utilizing multi-timeframe charts work in the same manner. Using wider time frames to forecast shorter time frame price moves.

Using the Rifle Charts

Having a methodology in place is critical. The rifle charts utilize moving averages (MA) to determine price trends and stochastic oscillators to gauge momentum. The Bollinger Bands (BBs) provide logical target ranges and a visual of price contraction or expansion. Having these charts on multiple time frames provides a full-depth view of the playing field. Intra-day trading utilizes the 60-minute, 15-minute, 5-minute and 1-minute time frames while swing trading and longer-term holds mainly utilize the daily, weekly and even monthly charts.

Swing or Scalp

Swing trading involves holding positions at least overnight to multiple days or weeks. Investing implies months to years. Investors with portfolios or longer-term holds should primarily focus on the wider time frames. Intra-day traders primarily looking to scalp profits will prioritize the 1-minute triggers while utilizing the other intra-day charts for the doppler effect. Make sure you don’t get your time frames mixed up. Linearity is the key concept to keep in mind. Patterns and indicators that work on a smaller time frame will also work on a wider time frame if you understand the is a wider price range involved. This means trimming risk with smaller size allocations. Many traders will start with larger shares and trim down the sizing as they convert to wider time frames.

Use Multi-Time Frames as a Doppler Radar for Stock Price Trajectories

Forecasting Trajectories with Mini Pups

A mini-pup is a powerful price pattern that can be tracked on the rifle charts. All uptrends eventually peak and pullback. Pullbacks will either hold the 5-period MA support, bounce and resume the uptrend or collapse through the 15-period MA and form a trend reversal. The 5-period MA is the “line in the sand” support on uptrends. When a stock peaks and falls to test the 5-period MA or even slips under it, it will stall the stochastic and possible form a crossover down. If the stock rises back up through the 5-period MA and slopes the stochastic back up (instead of crossing down), that is the mini-pup pattern. When this trigger, expect upside price moves towards the upper BBs. When a mini-pup forms on a wider time frame, then expect the shorter time frames to react. The shorter time frames are used to pinpoint entries when their stochastic triggers with a crossover back up.

Perfect Storms

A perfect storm is an ultimate pattern. This forms when three or more simultaneous time frames trigger mini-pups. This is the highest probability pattern for traders and investors. The caveat here is that by the time a perfect storm becomes transparent, most of the move may already have been made. Therefore, the key is spotting the wider time frame mini pup and then entering on the smaller times frames and trimming profits when the pattern becomes fully transparent. Utilizing the multi-frame frames with the Rifle Charts using mini-pup patterns can dramatically improve forecasting accuracy and provides trigger points and targets. Further optimization can be developed utilizing more price tools like Fibonacci retracement levels and the various channel and envelope indicators. As usual, use what works with your methodology to create converging signals.

 


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