I'm a big fan of using a lower timeframe to trigger into setups identified on a higher trading timeframe. Typically that lower timeframe trigger will be based upon some kind of candlestick or micro-chart-pattern. The following was an email request I received from a trader who is developing his skills at the same concept.
Would you be so kind as to look at the attached charts and tell me if I'm more or less on the right track with going down to the lower timeframe chart to find the trigger? On the LHS is the trading timeframe chart of the SPY symbol, and on the RHS is the lower timeframe chart.
The following are the charts, with my comments added following each image. I've removed any reference to the actual timeframes used by this trader, as the concept applies to all trading timeframes with a lower timeframe chosen approximately 3-5 times smaller in scale.
Note: If you want to see my entry trigger education, it’s within this document: YTC Price Action Trader
Chart Sequence 1:
Excellent. I'd call it a 123 Bottom rather than Double Bottom, but the result is exactly the same. Nice work!
Chart Sequence 2:
Perfect! It can be hard to enter these sometimes, as on the lower timeframe you're going against a large down-thrust. But the congestion at the bottom shows a clear inability to continue lower. The break back above this congestion provides a good trigger long.
Chart Sequence 3:
Good. The key trigger item here is the thrust upwards towards the end of the box, which quickly failed on a large red candle.
Chart Sequence 4:
It's always hard to comment with hindsight. I'd suggest I might have been tempted to take an earlier entry (the first reversal signal after the break below the first CPB swing low). However I may have then got stopped out before the better re-entry (your one) which occurred after the strong push higher. The following chart shows these points in case this is not clear.
Chart Sequence 5:
Good entry. With hindsight I'd be surprised if I didn't scratch this one and re-enter. Always difficult to say after the fact though. The chart below shows the possible scratch & re-entry locations.
Chart Sequence 6:
Good. E1 may have resulted in a breakeven scratch or loss. E2 a small profit. Hopefully it balanced out in the end.
Chart Sequence 7:
Beautiful. There's not much more can be said about this one.
Chart Sequence 8:
Exactly right. A break below the previous swing low support, quickly reversed.
Chart Sequence 9:
Beautiful. A test back below the previous swing high level, quickly reversed, indicating demand at this level.
Chart Sequence 10:
Difficult to comment here. Trading timeframe price action just shows a grinding downwards move. I'd want to see more "context" to say whether or not I'd be looking for an entry here.
However, if you assess this as a breakout down, then both E1 and E2 are fine for Breakout Pullback entries.