A trading instruction excerpt describing a two-timeframe strategy using monthly and daily charts. The speaker explains matching moving averages across timeframes, identifying an 'auction area' retest on the lower timeframe as an entry, using the moving averages and auction retest to set natural stops, and targeting a 2:1 reward-to-risk on the breakout.
If this is the monthly, let's say and I'm going down to the daily and I've got that similar type of pattern and does something like that, that's the area that I'm interested in for the long on that lower time frame. Because that's the auction retest before we get the breakout. So that's why the moving averages have to match the time frames quite nicely. Because I want the break into the moving average and the breakout. Because the moving average isn't what I'm using to trade. This is making sure that the edge is in my favor on both time frames. This is the month and then this one is the day. That's what I would want to see between them. I want to month looking really smooth. Looking like a river swimming in that tide that direction. This one is going to be the more volatile one. So when we get that auction area test and that breakout of the auction area test. So simple. Because this here gives our natural stop and then we're looking for that 2 to 1 target to the upside.
