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During a pullback, ETH’s 4h and 1h charts often disagree. The 4h is still in an uptrend, since no 4h candle has closed below its last confirmed swing low, while the 1h has closed below its last confirmed swing low and prints lower highs and lower lows, a downtrend by the same rules. So you decide first which chart sets the direction and which places the entry and the stop.
Choosing the pair
Start with the lower timeframe, the one you put the stop on and need to be around for when its candles close. If you can check the chart every hour or two, that is the 1h; if only a few times a day, the 4h. The higher timeframe sits four to seven times above it (a weekly is seven dailies in crypto).
| You enter on | Direction from |
|---|---|
| 15m | 1h |
| 1h | 4h |
| 4h | Daily |
| Daily | Weekly |
Closer pairs, such as 1h and 2h, mark nearly the same swings. Much wider ones, such as 15m entries under a daily direction, put a small stop inside a daily pullback that can hold many 15m trend changes, and any of them can take it out before the daily move starts. A third chart above the pair is useful for its levels alone, such as the previous day’s and week’s highs and lows, where stop orders pile up.
On Binance the 4h candles close at 00:00, 04:00, 08:00 UTC and so on, so every fourth 1h close is also a 4h close.
What each timeframe decides
A swing high or low counts as confirmed once five candles have printed on each side of it, which is how Finora, an AI trading assistant on Telegram, marks swings in its chart table. A trend flips only on a close beyond the last confirmed swing on the other side: below the last confirmed swing low in an uptrend, above the last confirmed swing high in a downtrend. The higher timeframe’s trend is the side you trade, and a flip on it ends the whole idea. In an uptrend its obvious highs, where stops cluster, are where targets go.
The lower timeframe times the entry. You wait for its structure to turn in the higher timeframe’s direction, buy its pullback and put the stop behind its swing, much closer than any higher-timeframe swing. It also confirms sooner: a 1h swing confirms five hours after it prints, a 4h swing about 20 hours after.
A worked example on the 4h and the 1h
The prices are invented, and BTC’s 4h trend is up throughout. On the 4h, a leg from a higher low at 2,380 closed above the 2,520 swing high, a bullish break of structure (BOS, a close beyond the last confirmed swing in the trend’s direction), and ran to 2,740 without a pullback. That makes 2,380 the protected low, the confirmed low that launched the breaking leg, and the 4h trend stays up until a 4h candle closes below it. Once five 4h candles printed under it, 2,740 was a confirmed swing high, with short sellers’ buy stops resting just above it.
The pullback reaches 2,512, just under the broken 2,520 high. On the 1h the drop is a downtrend of its own, and its last confirmed swing high is a lower high at 2,575. The charts now disagree, so we wait for the 1h to turn back up.
From 2,512 a 1h candle closes at 2,582, above 2,575. That is a change of character (CHoCH, the first close beyond the last confirmed swing against the trend; see BOS vs CHoCH), and the 1h now agrees with the 4h. A CHoCH ends the 1h downtrend without setting up a long by itself, so we wait for the first bullish BOS, which leaves a confirmed higher low to put the stop behind. The leg tops at 2,598 and pulls back to 2,551, and once both have confirmed, a 1h candle closes at 2,606, above 2,598. The breaking leg runs to 2,628, and we buy its pullback with a limit at 2,600, at the broken high.
- Entry: 2,600.
- Invalidation: a 1h close below 2,551, the higher low that launched the BOS leg (see the invalidation level guide).
- Stop: 2,536. Recent 1h wicks ran 10 to 12 points past their levels, so it sits 15 below 2,551. That is 64 points from entry, and that distance is 1R.
- Target: 2,730, just under the buy stops above 2,740. 130 points, about 2.0R.
When the limit fills, 2,512 hasn’t had five 4h candles print after it, so the only confirmed 4h low to put a stop behind is 2,380. Recent 4h wicks ran 20 to 30 points past their levels, so a long taken off the 4h alone at 2,600 would need its stop at 2,340: 260 points of risk, and the same 130-point target pays 0.5R.
The cost of the tighter stop is that the 1h trade can fail while the 4h trend is fine. If a 1h candle closes below 2,551 we’re out at that close; the stop at 2,536 covers a drop too fast to wait for the hour. The 4h is still bullish at that point, so any next long is a new trade, sized from scratch.
When the two timeframes disagree
A trade with the lower timeframe against the higher one is counter-trend, such as a 1h short during the drop to 2,512. We take one only at smaller size, with the target in front of the nearest higher-timeframe level (here just above 2,520), and only when that target is further away than the stop. The usual case is a bounce inside a higher-timeframe downtrend: a long there aims just under the higher timeframe’s last confirmed swing high, the lower high where bounces tend to be sold.
For an altcoin, BTC on the same timeframe acts as one more higher timeframe. ETH’s long had BTC’s 4h uptrend behind it, and against a bearish BTC we would size it as a counter-trend trade.
Where it goes wrong
- Dropping to a lower timeframe to find a signal. The 1h has no CHoCH yet and the 15m does. Taking it turns the trade into a 15m trade, with a stop that an ordinary 1h candle can run through.
- Reading the 4h before it closes. A 1h candle can close below a 4h level at 10:00 UTC, and the 4h candle can still close back above it at 12:00. The 4h trend changes only on the 4h close.
- Moving the exit to the higher timeframe after entry. After a 1h close below 2,551, calling it a 4h trade and moving the stop to 2,340 turns a 64-point risk into 260 points, about 4R on the size you took.
How Finora shows the higher timeframes
On a chart below the daily, the table in a Finora read adds rows for the daily and weekly trend, plus BTC’s trend for altcoins, and the read calls a setup that disagrees with them counter-trend and asks for stronger confirmation. Under a Premium full read, the Big picture button builds one card from three timeframes of the same chart, such as 4h, 1h and 15m. /repeat runs your last pair again on a timeframe you pick, such as the 4h above a 1h entry.