As a day trader, it’s easy to get so focused on every little tick that you lose sight of the big picture. Just because you don’t pay attention to long-term timeframes doesn’t mean they don’t impact your trades. Here’s a great example from a few months ago.
I was shorting $JNUG intraday, with entries at $312 and $310. After loading up the position, the stock sat there for two hours, building what appeared to be a base. Some of the traders in the chat noticed what appeared to be a bull flag forming. They wanted to dump the short position and go long. This was understandable but incorrect.
But now zoom out an look at the daily chart – the longer term timeframe.
But you have to zoom out and look at the daily – it had run up from $15(0) to $30(0) (a forward split was executed on $JNUG later in the year, hence the 1/10th price in the above chart )without stop, so it was overextended. Regardless of how the intraday looks, it’s dangerous to go long on a daily chart that’s so stretched.
Use your daily charts for idea generation – finding stocks with patterns give you an idea of what they are likely to do next – and put them on your watchlist. Then use intraday charts to pinpoint your entry when a stock from your list is making a move.
Want to learn more? Just send me an email at firstname.lastname@example.org!