First up is the ten mile high view based on the monthly chart and get a wide look back through price history and see what stands out.
A price chart never lies or will spin you some story you hear from vested interest folks. Always look at what is obvious and clear. What is obvious here is price rose from the lower left to a high in the middle of the chart, then price fell sharply, recovered and fell sharply again. The next rise in price was laboured and so was its subsequent fall. Looking at the low part of each of the three attempts to rise shows us something interesting on the final attempt to rise. The time taken to rise was longer than all the previous attempts following the main fall in price from the middle of the chart, and we only from this last painfully slow rise do we see a clean, clear and obvious fall in price where no bullish activity of note took place.
At the end of that fall in price we see a narrow range relative to this time frame as been established and only now is price approaching the top of this range. The blue line indicates the upper part of the range and an area we as day traders need to start paying attention.
Next time frame, the weekly.
More intel comes to us, the blue line clearly shows the top of the range established on the monthly chart. Ignore the tiny red candle, it is only forming and not yet completed its journey through time. Its reaction so far gives us more information and as we drop down through other time frames we will get more and more intel to work from.
I have placed a tick mark showing an area of interest that will be on our radar if we see price break the established range and later test it, we want to be aware of areas of price support and profit targets well ahead of time. We now can see where price should get support if the range is going to be broken and tested, and we also see where a likely price area for profit around 500 points north.
Now we move to the daily time frame.
A short description but a telling one. The blue line is the top of our discovered price range and price has bounced off it and fallen back. We can say with full conviction that the range has not been broken. Ah, but the eagled eyed of you will say, hold on a second. What is the yellow line, this line is a second price area just below the high of the range denoted by the blue line. I drew in the yellow line to attract your eye to something worthy of note. The more nearer term high from the yellow line could be a good place for price to gain support from buyers who could send it with enough force up through the higher up blue line. It will be less of an effort for price to rise if this happens. Less effort means less cost and less cost means more profit, and more profit means pro money is happier to take the trade higher and break the range. But, we wait and see and keep an eye on how price reacts.
As the time frames go lower we see more and more of the methods of pro money.
Next we look at the 4hr time frame.
Between the two lines there is around 90 points. The second last candle shows how price pinned the lower end of this smaller range and closed higher up on the candle body and only a moderate amount of selling coming in. The way in which the selling came in wont be seen until we drop lower down in time. So lets move on.
1hr time frame.
An even clearer picture of price hitting the lower end of the price range with a bearish candle closing with buyers coming in, and the following candle closing bullish and the 3rd last candle closing with some sellers coming in, but not enough to push price back down given the later candles all closing with activity at their upper ends. So far, no major selling coming in. But look at the huge effort by pro money to push price higher in the box, that was a serious effort and not one that will fail without a fight. The fight of choice is now apparent, it is to tire out and try false breaks to gain enough orders enabling pro money to push again. This is not yet proven, and we need to wait, bit so far everything they are doing is bullish.
Lets drop down again.
30 min time frame.
Final chart given we are in a trading range. Price has risen toward the right edge and is in a holding mode. No major selling, no major buying and someone will have to give soon. Perhaps coming into the London close will see a retest of the lows or maybe a false bearish break, we simply dont know yet and must exercise patience and trade what we see. Some news driven even may be enough to bust price out and then we watch for a test where the loosing side gives up and the pro's take it from there.
