How often do you look at the weekly time frame? At least once before every trade or every once in a while?
Most Forex traders I speak with don’t use the weekly time frame nearly as much as they should. This is especially true for the traders who recently made the transition from the lower time frames to the higher time frames.
But even those who have been trading the daily charts for some time forget to check the weekly time frame before putting on a trade. Even I was guilty of this oversight shortly after I began trading on the higher time frames in 2010.
While this may sound like a small oversight, it can mean the difference between a seemingly favorable setup on the daily chart and a disastrous one.
Why Is the Weekly Time Frame So Important?
The weekly time frame is critical for similar reasons that I feel the daily time frame is superior to the lower time frames. But more than that, the weekly chart is important because it contains five days worth of trading. That’s five days worth of liquidity to form a single candle.
While that may sound obvious, it has huge implications.
Have you ever heard of something called “herd mentality”, also referred to as “mob mentality”? To be succinct, these terms describe how people are influenced by their peers to make certain decisions or adopt certain behaviors.
Forex trading is a perfect example of herd mentality. This is especially true for technicians, or chartists as some have come to call it. As technical traders we make decisions based on how the market responds to certain areas of influence called support and resistance levels.
In essence we are watching what “the market” does as a whole and reacting accordingly. Another way of saying it is that we are following the herd. Which is fine as long as you are following the smart money and staying away from the pig pen – we all know what happens to those traders.
Your ability to follow smart money is directly correlated to the odds of becoming a successful Forex trader. You can’t become successful until you develop this ability.
We do this by combining key support and resistance areas with simple price action strategies, among other things. All of these factors combined are what I like to call confluence factors.
So why then is the weekly time frame so important?
Because it gives you a broader scope of what the smart money is doing. It does this by showing five times more price action than that of the daily time frame.
That’s an invaluable asset to have and one that you should not be ignoring.
Now that you have a good grasp as to why the weekly time frame is so important, let’s take a look at an example of how using it can improve your trading.
Using the Weekly Time Frame to Stay Out of Trouble
A great way to use the weekly time frame is to avoid taking a position that isn’t as favorable as it may first appear on the daily time frame.
The GBPUSD daily chart below shows what would otherwise be a valid bearish pin bar setup at key resistance.
As nice as this setup may look, it doesn’t take long to notice that it didn’t work out. Just three days after forming the pin bar, GBPUSD rocketed higher taking out the tail of the pin bar. From there it was a straight move north to the tune of 400 pips.
So what went wrong? How could you have avoided this loss?
The weekly chart holds the answer. But before we get into the weekly chart, I should point out that the bearish pin bar above occurred on a Friday. While the timing of this pin bar was not an issue as we wouldn’t look to trade it until the following Monday, the price action on the weekly time frame was cause for concern.
Notice in the weekly chart above, the very same week that produced the bearish pin bar also produced a bullish engulfing bar. I don’t know about you, but that isn’t something I want to try and trade against.
By simply checking the weekly time frame before entering the market you could have avoided a loss from what appeared to be a valid pin bar setup on the daily chart.
The example above is just one instance. However, occurrences such as this happen every week, allowing you the opportunity to better position yourself in the market once you begin using the weekly time frame.
Becoming a successful Forex trader is all about putting the clues together in a way that gives you the upper hand. One very big clue can come from the weekly time frame, as you have just witnessed.
If you aren’t currently paying attention to the weekly time frame you aren’t getting a complete picture of what the market is doing. This limited visibility will hinder your ability to properly analyze a trade setup which can put you at an immediate disadvantage.
In order to stack the odds in your favor as a price action trader, you have to use all available resources to your advantage. And the weekly time frame is a huge resource that you need to tap into if you wish to succeed in this business.
Do you currently reference the weekly time frame before putting on a position? If not, do you think you will start having read this lesson?
Leave your comment, question or general feedback below. I look forward to hearing from you.
Hi there Justin,
Great wake up call by the way.
You are right I mainly focus on the daily timeframes and only look at the weekly time frame when the situation is not clear enough. I will implement this in my trading routine to also look at the weekly time frame before opening a new trade.
I’m glad you enjoyed the lesson.
That’s great to hear. It really does make a difference.
The GBPAUD is about to form a bullish pin bar(daily chart), when I look at the weekly chart its a bearish candle bar…. so, according to your article, we better do not trade this bullish pin bar? Thank you.
That’s correct. GBPAUD also just broke wedge support which is why it’s reacting the way it is at the moment.
I’m checking the weekly timeframe on every Monday morning . Thanks for this sharing at least I know I’m doing the right thing. Cheers!
Absolutely! Sounds like you’re on the right track.
I check weekly every day with daily…
Perfect! That’s the best way to go about it.
Yeah…. got it…. 🙂
hi Sir, do u factor monthly level together with your weekly & daily? Agree Higher TF level are superior.
Not typically. The weekly and daily time frames are generally all you need.
If it’s a significant level on the monthly time frame chances are it will be obvious on the daily and weekly as well.
Thanks for this, I found out about your website by coincedence through Google searching for something relating to best time frame and viola I found yours lol, I have been logging in everyday to read your topics I even joined in for your pin bar course because I didn’t have the full money yet for the full course but imma tell you bro I have been enjoying every bit of it even though I already knew about pin bar and I thought I knew it all about pin bar until I started to learn yours and found out that there was even a better way of entry thru the 50% retrace and it really blew my mind. Just wanna tell you that you’re doing a great job and please keep up the Good work.
Awesome to hear. The 50% entry method can certain help to increase your profits when trading pin bars.
hi justin…great article…just wanted to whether it would be easier just to look at the weekly candle after it has closed and let that candle inform my trading decisions on the daily chart for that particular week…
Steve, that’s certainly an option. I have several students who only trade from the weekly time frame.
The downside is, of course, that you won’t likely get as many opportunities, so patience is a big factor. But reliability does tend to increase as you move to higher time frames.
I trade weekly + 4HR charts, im doing very well. So i only focus on that single candle stick and follow it with a 4hr set up. In other words i dont have to wait for long for a set up. So technically im day trading a weekly chart.
salam ,Justin Bennett
it is really very useful article.
waiting for your article about moving average.
Thanks for that the weekly time frame stands and gives the best and last decision whether to short or long.
An eye opener. Thank your very much. That will be my daily routine and prior to taking any trades going forward.
very nice point
Great post. ..going to start looking at the weekly as I trade daily charts
Thanks a lot its so informing and enlightening
I am a novice doing demo trading on weekly trade setps by using daily setup for only trade entry
Really very informative topic. Weekly TF is obviously clear the picture of trend.
Thank you your tutorials. In my opinion these tutorials are the best I have seen
Yes i do but still finding it difficult linking the the set-up to the daily and 4hr chats. I guess i need to monitor and observe it closely. Thanks for sharing
It has been a tough 5 years in trading till Monday after the drone Attacks. I told myslef that I will never be trading on lower time frames like before other then the weekly timeframe. I am now doing reasearch on higher time frame trading.. and I feel like it is the key to stopping all the noise made in other timeframes..
Thanks for your atrticle.. will be reading more..
Absolutely, Daniel. A lot of traders tell me they had their “ah-ha” moment when they transitioned from the lower time frames to the daily and weekly. I certainly did!
Trading in the weekly timeframe makes everything so easy. It’s slow and steady!