Why the bigger timeframe matters when you read a chart pattern

A breakout on a 15-minute chart looks exactly like a breakout on a daily chart. But the two sit inside very different pictures, and the picture one timeframe up often decides how much a pattern is worth.

One timeframe up

A simple habit: before reading a pattern, look at the next bigger chart.

(On PipSwipe this is shown for you: the Clues in Chart school and the trend row on each card.)

How to tell the trend

PipSwipe uses a plain rule. A chart is trending up when price is above its 50-bar exponential moving average and that average is rising. It's trending down when price is below a falling 50-bar average. Anything else is sideways.

It's not the only way to define a trend, but it's consistent, and consistency is what lets you compare one chart with another.

With the trend, against the trend

• With the trend. A bullish pattern while the bigger chart trends up. The pattern and the bigger picture agree.
• Against the trend. A bullish pattern while the bigger chart trends down. The pattern is fighting the bigger picture, and patterns like that tend to fail more often.
• No clear trend. The bigger chart is going sideways. The pattern has to do the work on its own.

None of this is certain. A pattern against the trend can follow through, and one with the trend can fail. The bigger timeframe is a way to weigh a pattern, not a verdict.

Try it

Next time you look at a pattern, say out loud what the bigger chart is doing before you decide what you think of it. In PipSwipe's Chart school, the clue box shows the bigger chart's trend before you answer, and the key lesson afterwards tells you whether the trend helped or not.