Top-down analysis involves zooming out and looking at the ‘bigger picture’ when trading. We advise all our traders and members to look at the higher time frames before honing in on the lower time frames to day trade.
Conducting top down analysis is simple. Start with the daily or weekly chart. Identify any longer-term trends, ranges or levels in the market. Scale down into the 4hr and 1hr to look at more recent price and recent key levels in the market.
Once completed you will have a deeper understanding of the overall market trend and a long-term directional bias you can use when day trading alongside improved identification of critical levels in the market.