I am not a fan of multiple time frame analysis. Markets have no time frames. It produces a continuous stream of data from open to close. We chop it and chart it as per our own convenience. Candles and resultant patterns will differ as per the charting method.
This logic is not applicable to ‘Daily’ charts in respect of a day market. Here there is no question of chopping. They are for real and all the traders watch the very same levels.That is why levels like PDL,PDH and PDC attracts a lot of order flow. These are simply the High Low and Close of the previous day candle.
Every ‘Day candle’ is considered as a range. Price breaking out of this range is a major transition. Price moving above PDH and falling below PDL are important events. Breaking the PDH is a bullish event and a break down below PDL is very bearish.
Decision Point method works well when the day traders are in control of the market and fortunately most of the days they do. But it is important to know what the positional and investor side of the market is doing and its impact on our trades. The easier way is to have a look at the daily and see whether it is in a rally mode or in a decline mode. In other words look at the micro trend in Daily chart. (Read More)
When market is in a rally mode, buying range lows can be more rewarding and in a decline mode selling range highs are preferred trades. Be very careful while shorting rallies and buying on declines. Focus on PDL on rallies and monitor PDH on declines. Break of these levels will change the trading mode.
If market trades within a candle for the next few days this will create a Master Candle and this MC may act as a range. Pay attention to the MC extremes also.
Do not forget to take your daily dose. It is very important for your financial health