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We are day traders. We only trade for short time-frames that are by definition, within the trading day. So why look at daily charts?

 

Daily charts show the big picture or in other words, the overall trend. This is important to watch because it gives us an edge to trade in the same direction as the dominant trend even if we are intra-day traders. If a trend is going to go up over several days, it will also go up intra-day. As day traders it is easy to get tunnel vision, see only what is going on minute-by-minute, and forget what the overall trend is. I use the daily charts to help me see the overall trend and then use 30-minute and 10-minute charts to locate good entry and exit points.

 

This is what I see right now, as of Saturday October 13, 2012 in the S&P mini's. The chart below is a daily chart covering the last 2 months or so in the S&P mini’s. In that time, we have bounced off resistance twice at about 1465.00. On Friday we went about 5 handles below the support level of September 26 (the mid-point between Support on September 11 and last Friday, October 12). Although the market has been reaching new lows, these lows were not much lower on Thursday and Friday of last week. I’ll be keeping a close eye on this, as it suggests we may be reaching support levels and due for another climb back up to resistance.

 

1015.jpg

 

I will be watching for signs of reversals that may include sideways action for a few days, or I’ll be looking for more days that barely reach new lows. I will want to see the market start to go above the high of a previous candle 1-4 days prior to it, in order to get confirmation. In addition, I would like to see the market NOT go lower on bad news -- this is an excellent sign that support is firming up.

 

What I'm talking about really, is just an analysis of the Value Areas that Hoag prepares every morning for the recruits here at TopstepTrader. Value Areas are basically previous support and resistance levels that all traders can see. They represent where the balance has shifted between buyers and sellers, making such an indication worth paying attention to.

 

I'm going to be watching for an Open that initially trends down, then reverses 30-90 minutes after the Open and goes up the rest of the day. I'm expecting that to happen this week or next week at the latest. However, if we drop convincingly below the September 11 lows, then all bets are off and the next support level is down near 1400.00.

 

Many Profitable Returns,

Trader Gregg

 

Mr. Killpack has been studying the markets since 1988. He has read over 40,000 pages about trading and investing strategies, fundamental and technical analysis, and related topics. He began day trading in 2001.

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I think most people realise the importance of looking at a longer tf and would also be doing so by looking at daily or higher charts. It's definitely important though to highlight that by using sound auction principles to gain context a day trader can really increase their odds of success.

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