Here we are, stuck in the middle of a trading range. The market is in different states of transition depending on the time-frame from which you choose to observe. I’ve spoken of the multi-timeframe concept many times in the past, and right now the markets are in a very interesting state where there’s oversold to overbought transitions occurring from the near-term, to mid-term ,to long-term; very interesting indeed.

Multiple Timeframes refers to the time period you would choose to view stock charts. If you were looking at a candlestick chart, and it was a daily chart (mid-term time frame), then each candlestick would represent a day of trading. If you chose a weekly period (longer-term) then each candlestick would represent one week of trading. And finally, near-term charts have periods that are less than a day. The most common are 60, 10 and 1 minute charts.

Fractals
When you analyze a stock or market employing the techniques of Technical Analysis, it is important that you do not limit your analysis to a single time frame, otherwise you are not getting a full understanding of the forces that are affecting price action. As you go from longer-term to near-term, the shorter term views are fractals of the longer term views. The state of the longer term views exert influence over the shorter term.

For example, AAPL near-term charts, specifically the 60 minute charts, are showing indications of being very oversold. This means that there has been a much greater intensity to sell than to buy within the period of time. This can be viewed graphically with indicators like Stochastic, RSI, or Williams %R, where the line of the respective oscillator is near the bottom of the graph. When a stock or market gets to an extreme, pressure builds to reverse that sentiment and move from selling pressure to buying pressure.

Now, if a longer-term chart of the same market or stock shows something opposing, that instead of being oversold, the indicators show more overbought, or something between oversold and overbought, this has a balancing effect on the shorter term. If both time frames showed the same level of oversold or overbought, then that would put tremendous pressure on the nearer term to reverse direction.

So, the lesson here is that when multiple timeframes have indicators, like the oscillators previously mentioned , showing confirming levels, then the probability of the stock or market moving in the opposite direction, in an attempt to balance the buyers and sellers, is very high. And conversely, when you have charts with indicators in different timeframes that are not confirming, then the longer-term chart exerts influence over the shorter-term chart. But if the longer term is in transition or neutral, then the shorter-term will usually react according to it’s current state.

Conclusion
In this case AAPL near-term looks to like it’s set to go on a little buying spree very soon, to relieve the oversold conditions. There are other indicators that are also pointing to a near-term rise in AAPL price, or at least support from it going any lower, such as trend lines and price or gap support. And these would also be considered confirming indicators to the oversold conditions in the near-term.