Analysis of the 3-minute Timeframe
This document offers a comprehensive explanation of how to analyze the 3-minute timeframe, stemming from the confirmation of the previous market direction on the larger timeframes (6-hour and 1-hour).
Last updated
This document offers a comprehensive explanation of how to analyze the 3-minute timeframe, stemming from the confirmation of the previous market direction on the larger timeframes (6-hour and 1-hour).
Last updated
The 3-minute timeframe is optimal for trading, as it allows us to delve deeper into the behavior observed on the 1-hour chart and follow the larger timeframe analysis discussed in the preceding guides.
When observing the charts within this timeframe, it becomes evident how clear the price behavior is to the eye. The price moves in waves of emotion (cycles), and our objective is to capitalize on these waves while the market direction remains intact.
Let's examine the first example. This screenshot of the 3-minute chart was taken during a period when both the 6-hour and 1-hour timeframes were aligned, indicating a bearish market direction. Consequently, when observing the 3-minute timeframe, we can see the price moving in downward cycles, where "pumps" are followed by "dumps," until further notice.
The outlined portion represents the likely conclusion of the "pump" cycle, as indicated by the appearance of a tail on the green candle followed by a subsequent red candle. Given that we are in a bearish market state due to the analysis conducted on the higher timeframes, it's highly probable that "pumps" will be succeeded by "dumps." With this understanding, we position our trade within the outlined area.
In the subsequent image, we can observe the outcome of the trade. While awaiting our signal to exit the trade, a moment arrives when the price no longer continues its downward movement. Instead, we notice some bullish resistance, which subsequently leads to the appearance of a green candle. Once this candle emerges, we can confidently exit our trade and secure our profits, as it is likely that we are nearing a local bottom and another "pump" wave is imminent.
As we can observe, a few minutes later, the price exhibited an increase, and by leveraging Heikin-ashi candles and our method, we were able to anticipate this movement and secure our profits.
