Please find attached a Daily and 1 Hour chart demonstrating my style of trading which breaks down a short entry I did on the EURUSD.
As you can see, there is a bunch of confluence at the Daily and 1 Hour time frames which go hand in hand with each other. The charts demonstrate very good technical confluence leading to a profitable trade.
my trading system/strategy consists of applying advance technical analysis - as seen in the charts.
I start off at the Daily chart level and identify high confluence areas where price is likely to reverse such as price decelerating at or near a key line/trend line or daily ema.
Once I have identified such an area, I observe the daily candles to see what type of daily candle forms in the confluence area (high or low test, tweezer tops/bottoms, doji, inside bars and so on). I then drill down into the 1 Hour charts to see if I can further identify a reversal pending. This may appear as head and shoulders patterns in the 1 hour charts which will support an upcoming reversal on the dailies. The 1 Hour charts may also have double tops and may have broken a 1 hour trend line.
Assuming the level of confluence is high, I would be ready to take an entry.
So basically based on daily candles you dragged support and resistant lines,
then you went to 1 hour chart to drag support and resistant lines.
And the 1-hour lines should be in the daily confluence area?
Are there any indicators that you use to predict to what direction the next candles will go (to the 1-hour resistant or to 1-hour support lines)?
Hi Kopi_Susu, sorry for the late reply. I have been on the road.
I do use support and resistance lines in the daily and 1 hour charts, however this is only a small piece of the puzzle in identifying a potential set up. I like to have several factors of confluence to be present before even thinking about taking a trade. For example, I will need to see price action losing momentum as it nears toward a key level/line. Assuming price is heading up, in order to get excited for a shorting opportunity, I would like to see a 1 hour trend line break (momentum slowing/flipping), double top 1 hour price pattern and so on.
The 1 hour lines are not ALWAYS 100% accurate with the daily key levels/lines. I dont really like to call a key line a key line. I prefer to call it a key 'level' because price will almost always penetrate a key line, come back down retest it etc etc. Its not often price rejects a key 'line' to the pip. So dont get too fixated on a key line price level.
The only indicators I use as confluence would be the 1 hour 50 ema and sometimes the 4 hour 50 ema. All other indicators such as MACD are lagging and not very accurate in my opinion. My charts are very clean. Remember simple is sometimes best.
I am going to be posting a DAY TRADE example shortly which uses some of the above concepts I have gone over however I believe they are lower risk because I am 99% certain a trend has changed as I demand more confluence and my DAY TRADE is 'trading with the trend' and not an attempt to try pin point the reversal for a swing trade.