Ask Colin

I use MetaStock, I like the MACD, but sometimes the daily chart is the opposite of what a weekly chart indicates. As I am a 2 - 3 month hold on a stock, should I concentrate on daily charts or weekly charts?

As we teach at length in E114 Technical Analysis at the Securities Institute of Australia, trends exist in many timeframes. Long-term trends influence short-term trends. The best trades are made when trading a trend in your timeframe that is in the same direction as the longer-term trend.

If you are trading 2 to 3 month trends, you should probably concentrate on three charts: The monthly chart for the long-term trend. The weekly chart for the medium term trend, which you are trading. The daily chart for the short-term trend on which you are tactically opening and closing your trades.

What you need is to only trade charts where the weekly trend is up AND the monthly trend is also up. This guarantees you are trading with the long-term trend. Then you try to enter as the daily trend turns up too. The MACD can be used for all three of these trend assessments.

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