I've been meaning to do a post of this kind for a while now....
One "trick" I often use when plotting charts for the overall market, i.e. SPY, QQQ, IWM etc
I not only look at the DAILY or weekly charts to try and gauge what's going on with the "overall big picture" to hopefully try and spot PATTERNS, trade-able, actionable patterns like "CUP and HANDLE" patterns, "Head and Shoulder patterns", "Inverse Head and Shoulder" patterns, Falling Wedge patterns, Bull Flag patterns etc...
But, most importantly, I also use SMALLER time frames such as 60 and 30 minute time frames to try and spot HIDDEN patterns that aren't visible by the "naked eye" when looking at the Daily or Weekly time frame charts!! Smaller time frame allows you to zoom down, just like a microscope and look at the "DNA"(genetic make-up) of the chart if you will !! If you know what i mean?!
Take a look at the attached SPY chart below: AOT members who visit the 'Power Earnings Gap'(PEG) watchlist often probably recognize this chart! I've kept it and keep on there permanently! Even posted it on twitter a few times....
So if you saw the above chart in the PEG watchlist, then chances are you probably saw this SPY chart attached below as well !!
It's the SMALLER TIME chart of the SPY: the 30 minute time frame chart to be exact!
Note, the CLEAR bottoming "Inverse HEAD and SHOULDER" bottoming pattern that emerged back in early April !
As a matter of fact, I was using this chart/ this exact bottoming pattern, that was only truly visible using the 30 minute charts to move out from 100% cash and start to play more LONGS at that time ..... notice how difficult it is to see that "Inverse HEAD and SHOULDER" bottoming pattern on the DAILY charts! Actually, the daily chart during the late march to early April time looked like a COMPLETE mess!
But once you zoom down into the smaller time frames you've just uncovered a beauty of a bottoming pattern and boy oh boy, did it ever play out!
......Fast Forward to today....
Now, notice how recently the same 30 minute chart also uncovered a near PERFECT "Inverse Head and Shoulder" pattern once again, last week!
I urge you all(every single trader) to add this KILLER weapon to your trading arsenal, folks!
Use SMALLER time frames(15, 30, 60 minute charts) to unlock hidden patterns that aren't visible on the daily/weekly charts! Get that EDGE!
"The edge", a thing that so many traders talk about and want is often found in the smaller time frames!
This is a great way to spot and get into patterns ahead of the masses because you were shrewd enough to zoom down into the smaller time frames and do some "gum-shoe" detective work!
Hope this helps!
Happy Trading!
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