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Another interesting feature of price patterns is how they play out across different timeframes.
For example, if you see a pattern on the current timeframe chart you are using, have you wondered how it would look like on a timeframe which is higher or lower?
Looking at the example above, on the left we have a chart which is in the hourly timeframe, and on the right we have the same chart in the daily timeframe.
When you transit from an hourly timeframe to a daily timeframe, what happens is that the prices get “compressed”, because now all those hours are packed into one day.
So in this chart, we see the triangle pattern on the hourly chart get compressed into a pennant pattern on the daily chart.
So you might be thinking, how is this relevant to actual trading?
Well, for starters, this give you more context.
When you are studying the chart pattern on the current timeframe, thinking about how the pattern on the larger timeframe looks like literally gives you a bigger picture, allowing you to strategize your trades better.
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