The Concept of Time.
Why forex gurus or market analyst pay lip service to higher timeframes ,and call lower ones noise is to create ambiguity.
lower time frames are faster hence appear noisy and in comprehensible.
But we are no going to discuss about trading higher time frames.
We will discuss why one must wait for visualizing the proper movements in price.
Why 5 minute down candle in an uptrend can lie is because it is just way less amount of time to contain the information price wants to convey.
But giving price say 30-40 Minutes or even an hour(for intraday up trend)
We give price the chance to tip us on how much price actually wants to drop.
In short given an hour we can assume price has contained enough down ward information that it may have ended.
So waiting an hour we gave price time to see that yes let it drop see how much it can drop.
Now on a weekly up trend same time value to account for down move can and should be increased. to say 12 hours or so.
Let us assume there is an up move on a daily chart from a point A happening let us assume that somehow you were in it.You are sitting on your chair you see first 5 minute candle drop.
What do you think.
If you are a support resistance trader,or supply demand trader,you close your buy if there is your line there.
If you are skeptical PA trader you say,i don't care about support resistance let price show me over the next 1 hour what it wants to do.
Price prints another down bar on 5 minute again
40 minutes later you see it is still going own but slower
in an hour price has gone down but also come up a little bit.
Now give enough time you are now able to see that B has been established.
Now i can discount all ambiguity and surely say that it is point B.
You pull up your chart and see in 5 minute the last time price jumped upstairs.
You wait for DB on 5 minute of the down move,And last lower high to be equalized.
then you buy it with stops behind the last impulse wave.
The above qualifies for a sane traders plan.
Now price starts going up and then stops at the high,Now you have yourself a resistance to up move.
You close your buy if your skeptical,you hold your buy if your tough trader.But move stops to Breakeven.
If you are very tough trader you place your stop behind last down move double bottom,and wait for price to break the high or take your stop looss out.
(This relates to volatility, i will explain this later)
If you have been reading so far,you may have visualized how a level came into existence and how price started to appear capped at the high on higher time frame.
First it was just the 5 minute bear candle,now it is a 1 hourly bear candle.
Up the time a little bit if price spends 4 hours here this might be formation of daily resistance.
Time is key.Given enough time price shows its hand.
But it will never violate the principle of trend movement.
It will still stay up as long as last higher low holds.
You need to start looking at it this way,price hits a level drops from there then starts showing resistance on hourly,and eventually that is how B(resistance) is formed.
Chew on this.
It is based on what we have learn't so far.