Top Down Analysis
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Last updated
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Label all charts starting from monthly till H1. Label the full chart of monthly, then label only the last leg of monthly on weekly, label the last leg of weekly on daily, the last leg of daily on h4 and the last leg of h4 on h1/15 mins.
Check for divergences between the last two impulses on all time frames
Fib the latest impulsive wave, in these time frames, if the impulse is the potential wave 1 or wave 3.
Count the corrective waves when it forms after the wave you just fibbed. Corrective waves should be at least 3 waves, if yes then
Check for the completion of the corrective structure – for regular flat, zigzag and expanding flat the structure completes when wave C crosses the end of wave A. In the picture below the structure is completed when the green line is broken.
After you see structure completion, note the time frame to which the structure belongs - how to know this? The structure belongs to the highest time frame on which you see the same structure you are tracking.
When the last wave of corrective pattern reaches the fib level you are waiting for (as per the fib ratio given in the table in the Fibonacci lesson), move to the lower time frame .
Set ups are to be found in lower time frame, 15 minutes or 1 hour time frame.
Wait for a new impulse down which goes below the last swing low on the same time frame
Fib the impulse down and wait for the corrective pattern to complete or touch the expected fib level of 61% or 38%.
In the next lesson you will learn how to find trade set ups after the Top down Analysis
