Very often, in this blog, I talk about time frames of charts. In most instances it is relation to the chart being “bullish” or “bearish” – as I see it. Typically these are hourly (1H) time frame and intermediate (4H) one. They also can be referred to as higher or lower order of magnitude, when compared to one another. Even when talking about one currency pair, these charts might present different picture at the same time. This might be little difficult concept to grasp. Somebody might say, “Cross is either bullish or bearish, how can charts of the same  instrument concurrently contradict each other?” Well, they can and, often, do. As a matter of fact, this is very common and irrespective of system or method used for trading. That’s right, these kind of contradictions between time frames happen all the time. Like right now in most Yen pairs.
I trade JPY crosses a lot so they come up in this blog time and again. My view has been bearish Yen, or long crosses, due to the way they are quoted. In most instances, though, it doesn’t mean that I simply buy and hold them, but rather try timing my entries in order to maximize the gains while being in the market as little as possible. Sometimes in my analysis I come across a situation when I place a buy order even though it is possible that price might be going down first. Such is case with NZD-JPY. On 4H chart of this cross, nice breakout set up can be seen right now. Other Yen pairs have already gone through this line, more or less and are currently in a little different phase . Kiwi-Yen is lagging behind, but it provides additional buy opportunity. I want to include large charts in this post, that’s why thumbnail images.

If the price moves above 50.70 I want to be in on it, with first objective at 53.50 and second one at 56.00. On this graph both entry and targets seem nearby but, since an intermediate term chart is used, this will not happen tomorrow. Time will be measured in, probably, weeks. Hopefully sooner. At any rate, this chart is giving me bullish signal. Hourly chart, on the other hand, looks a little different. Here, by my analysis, the up move ran out of steam and some sell off is very probable. Opposite what 4H chart indicates.

Price broke through previous lows, went under 100SMA and even retested it already. These are indications of continued slide. Two charts of the same cross, two different analysis. Interestingly enough, this is the case for all JPY pairs at this moment. So, which view should be acted on? Neither one of them is in itself better or worse. As a matter of fact there is nothing wrong with trying to catch smaller pips on 1H chart and then bigger on 4H. It depends on one’s personal outlook. Myself, I will not be taking short trades. My primary directional chart is 4H, so I’m taking only long trades, not trying to predict every market turn and twist. If I’m right and price drops, this will create additional buying opportunity on hourly chart, which could take me to where my 4H chart buy is. In short, I deal with conflicting time frame’s analysis by developing a directional bias, normally (but not always) dictated by higher order of magnitude chart. Besides, if I wait until a buying set up develops on hourly chart and the sentiment on 4H remains unchanged, my long trade will have much higher probability of success, with both time frames pointing in the same direction. So, I’m sitting on sidelines.
Of course other currencies are in play. Orders are pending in GBP-CHF from last week, small time frames of GBP-JPY are always a buy, irrespective of other analysis, preferably 2 or 3 points breakouts. After the weekend gaps are possible, potential trades. I’m confident some level of activity will be maintained.

Mike K.