The importance of multiple timeframe analysis.
I will use $C52 as a example here.
Look as the daily chart below
Looks very bearish right? Even a small kid can tell that its in a downtrend.
What about weekly chart?
Also very bearish and clear downtrend!
Now lets see the monthly and apply the supply demand strategy.
Remember the first announcement of potential uber alliance? Price gapped up and retailers jumped in to catch the boat only to realise later it was a fakeout?
I actually did warn here on IN that it was a fake out and it was an opportunity to go short rather than going long.
Why? Look below on the weekly chart.
Price was in the middle of nowhere on monthly and current trend in down and price spiked up to weekly supply so obviously selling has higher probability. And that was how the fake bullish pinbar was created on the monthly chart.
So now after the bull trap, what will retailers do? Revenge trade! SHORT SHORT SHORT!
But price was actually heading towards monthly demand inside a 3 months demand area. Look at the 3months chart below.
Rally base rally demand zone on the 3 months chart with monthly demand zone inside it!
Now will you still go short now when price is at this area?
Of course not, this is where SMART money will look to cover their shorts to take partial/full profits. Coincidentally the announcement of the confirmed uber and comfort alliance occured at the lowest point in the monthly demand zone.
There was actually a rally base rally (marked in orange box) above it that failed.
That demand zone did not remove anything unlike this demand zone that removed the strong resistance. Therefore the odds are lower. Even if you took a long there you would still get about 2.8RR (make 2.8% return by risking 1% of your capital) excluding dividends.
Personally i wouldn't take a trade setup offering below 3RR.
Let's look at the BIG BOYS timeframe:
Clear uptrend with higher highs and no lower lows
Clear uptrend with higher highs and no lower lows.
There’s also a nice rally base rally demand area below.
So if the current 3 months demand area fails, we could see price heading lower towards this demand area.
From looking all timeframes, you will avoid making mistakes such as buying too high and selling too low. Always go one time frame higher than your entry timeframe to check where price is currently at. Remember every timeframe has its own trend.
So from these charts i hope you guys can see why i don't use
indicators/volume and even FA.
News can mislead retailers, volumes can be hidden/manipulated but the charts DON’T LIE.
This is my 88th post and my last (for now).
I realised i have spent too much time here and i have been procrastinating on a new project that i want to start on (using options to trade stocks using supply and demand).
I will come back here when i'm done with that and maybe i'll start my own blog or something.
Do a youtube/google search you want to learn more. There are many many free content. That's where i started as well. Most importantly you need to backtest it first and then forward test and then only do it on a live account. All the tests and live trading done must be journaled! I have not met any CONSISTENT profitable traders (if you made money for the past few months and is on a winning streak you are not considered a consistent profitable trader yet) that doesn’t journal their trades and backtests.
Start with a small live trading account first. To be profitable you need to be consistent. If you can’t make 10% every month on a small account then how the hell are you going to make 10% on a much bigger account size?
It’s going to be a loooooong process but it will be worth it.
To be a successful trader, you must do what unsuccessful traders were UNWILLING to do!