In the Master Pattern, one line does most of the work: the value line. Learn how to read it on two timeframes and you have a simple blueprint, a bias from the higher timeframe and an entry from the lower one.
What the Value Line Is
When price breaks out of a contraction box, a line is drawn through the center of that box and extended to the right. That is the value line. It marks the balance point between buyers and sellers from the contraction phase, and it becomes the reference price whips around during expansion.
A level price comes back to
Value lines act like a magnet. Price tends to move away from one and return to it at some point, which is most noticeable on higher timeframe value lines.
Step 1: Set Your Bias on the Higher Timeframe
Use the value line from a higher timeframe to decide direction. When price settles above it, you look for longs. When price settles below it, you look for shorts.
The word that matters is settles. The cleanest bias signal is price breaking and closing through the higher timeframe value line. A wick through the line, or a touch, is not the same thing.
Step 2: Find Your Entry on the Lower Timeframe
Once bias is set, drop to a lower timeframe and use its value lines for entries. The higher timeframe tells you which direction to trade. The lower timeframe tells you where.
- →Uptrend bias: look for long entries below the lower timeframe value line.
- →Downtrend bias: look for short entries above the lower timeframe value line.
- →Entries come from the area around the lower timeframe value line, not from the line itself.
The Master Pattern Strategy: 2 Steps to Perfect Bias and Entries
Timeframe Pairings
| Job | Timeframes commonly used |
|---|---|
| Bias (higher timeframe value line) | Daily, 12 hour, 8 hour or 4 hour |
| Entries (lower timeframe value line) | 30 minute, 15 minute or 5 minute |
Which Box Should the Value Line Come From?
A value line is only as useful as the box behind it. Boxes are tiered by how many sides price has broken: Minor (one side), Major (two sides) and Origin (three or more). For entries, a Major box on the lower timeframe is the one to look for, because both sides have been broken and it gives you a structure to base entries and exits on. See our guide to Minor vs Major vs Origin boxes.
Common Mistakes
- →Setting bias from a wick through the line instead of a break and close.
- →Trading entries directly on the line instead of in the area it defines.
- →Using a lower timeframe value line for bias.
- →Using a Minor box value line for entries.
See Your Value Lines On Every Timeframe
Indicator X draws the contraction box and extends the value line for you, with multi-timeframe support so you can see the higher timeframe value line on a lower timeframe chart. 7-day free trial.
Try Indicator X FreeWhat does it mean when price settles above the value line?
Price has broken and closed above the higher timeframe value line, which sets a long bias.
Do I enter exactly on the value line?
No. Look for long entries below the lower timeframe value line in an uptrend, and short entries above it in a downtrend.