Some of the most profitable traders use a strategy of selling rallies in a downtrend or buying dips in an uptrend. The key is to have a valid method of determining the tradable trend and using different time frames to better position your trades.

For example, if you use the daily time frame to sell rallies when the weekly trend is down, you are accessing the power of multiple time frame trading. Here, we’ll introduce a new indicator, the TrendFinder, that accomplishes this goal and illustrate how it works in a multiple time frame approach.

Multiple time frame analysis is based on the concept that every time period has its own trend, as well as its own support and resistance levels. For example, comparing a 10-minute chart to a daily chart reveals the trend and support-resistance levels of the 10-minute bars differ from those of the daily bars.