Candlestick Line Time Frames

One of the beautiful attributes of the candlestick line is that the same analysis can be applied to multiple time frames.

The time frame of a candlestick line is the time duration between the candlestick's opening price and closing price.

For example, a daily candlestick chart would consist of candlestick lines with opening prices corresponding with the day's opening price, and closing prices corresponding with the day's closing price (Figure 25).

A 5-minute candlestick chart would have candlestick lines with time duration of 5 minutes between each candlestick's opening price and closing price.

Most good computer charting software allows easy conversion from one time frame to the next.

As we will see in latter examples, utilizing several different time frames in viewing a stocks candlesticks pattern is a very effective way to read the underlying sentiments behind a stocks movement.

Figure 25

Dissecting a Candlestick

Changing time frames when viewing candlestick patterns is useful tool when looking for patterns leading up to good trading opportunities.

For example, consider the Bullish Harami Pattern that is manifested on the Daily time frame chart (Figure 26).

The same stock plotted on a 15 min time frame chart shows that the stock is actually setting up for a Bullish Reversal Consolidation pattern.

Using the Daily chart and the 15 min chart together make it easier to find possible trade opportunities.

For example, the trader can scan for Harami setups on the Daily chart, and then pull up a 15 min chart to confirm the stock is experiencing a consolidation pattern preparing for a break out.

Figure 26

Figure 27