Top-Down analysis by Johnny

Top-Down analysis by Johnny, part 1

The top timeframe is the main priority in my daily analysis. First of all, I always try to analyze and work with a long-term perspective. Any position opened on the junior timeframe should be confirmed by the logic and context of the senior one.

Now I'll talk about the simplest tools I use to have a clear picture of price action and a checklist you can use for yourself.

Before we get to the tools, you will need some timeframes on which to mark and check your analysis:

Swing trading: 1M -> 1W
Intraday - trading: 1W -> 1D

The main task when analyzing these timeframes is to find the key liquidity and predict the expansion of the monthly, weekly, and daily candlestick. In which direction is the next month, week, or day likely to move? This is the key question I always try to answer.

Understanding the logic of the expansions of these periods (candles), it will be easier for you to analyze the younger timeframes, because you already have one and only direction in which to work. And at any time of doubt about pricing, you should give preference to the older period.

When analyzing, I primarily use the logic of liquidity, and in particular the Turtle Soup trading setup developed by one of the famous female traders, Linda Raschke. We will talk about it in the following parts.

It is important to note that the price always moves from liquidity to liquidity. This is almost the only thing I use to understand the price context. After identifying the key liquidity pools, I look at the Orderflow movement, which also consists of liquidity, but with the addition of inefficiencies and order blocks.

These tools allow me to determine the price context as accurately as possible and work in the right direction on the younger timeframes.

We'll talk about how to combine junior timeframes with the context of the senior ones in the next part.