When studying chart patterns and indicators over different time frames, traders find that buy and sell signals may be conflicting and confusing. For example, looking at a 3 month frame may give one the buy signal while looking at the longer time frame may give one the sell signal. Hence for more clarity, it is important to look at charts over different time periods and time frames in order to get a better sense of the direction of a security.
How should option traders interpret chart patterns on different time frames?
A chart pattern is stronger when formed over a longer period of time as compared to a shorter period of time. For example, a double top formed over a week is less significant and strong as compared to a double top formed over 2 months.