Top down analysis is a method of analyzing charts by working your way down from the higher time frames. By first looking at the bigger picture of price direction, (the overall trend) and then zooming down to the smaller time frames to find exact areas for ideal setups.

With this approach, you are able to build a comprehensive understanding of price action without neglecting key levels or misreading the direction of price.

→ Every monthly candle is made up of 4 weekly candles:

→ Every weekly candle is made up of 5 daily candles (this is because the market is closed for two days on the weekend):

→ Every daily candle is made up of 6 4-hour candles:

→ Every 4-hour candle is made just of 4 1-hour candles:

Understanding how candles are made over time is a simple concept, but understanding in-real time and being conscious of time as it relates to how candles form will greatly improve your ability to read price action before it happens. We’ll touch more on this in Reading Candles Backwards and Wick Fills.

This topic is greatly explained in detail by Don on the Market Controllers course. Video explanations of these topics are much easier to grasp.

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