Trading the daily charts is really good for people who do not have much time to sit and watch their charts closely. Daily charts usually mark the point at which a trader switches from intraday trading to long term trading. Although some trades opened on a daily chart can be wrapped up in under 24 hours many trades last several days. Either way daily charts do not require much monitoring, you do not need to check them as often as you would 1hr charts or even 4hr charts.
The great thing about my trading strategy is that it can be adapted to trade any time frame. I trade pure price action and I keep it as simple as possible. So switching from 1hr to weekly charts is dead simple when your method is based only on price analysis.
If you have been following my weekly analysis lately you will have noticed that I am constantly on the lookout for ranges because a good range means good reversal trades. Finding a good range on a 4hr charts usually results in 2-4 reversal trades at an average of 40 pips per trade which results in 80-160 pips.
A good range on a daily chart usually results in the same amount of trades but with an average profit of 80 pips per trade. So a good range on a daily chart can be worth between 160-320 pips for me and the best thing is that these trades are low maintenance.
Ranges are perfect areas to make profit because range forms between an area of support and an area of resistance. What else do we call support and resistance? a buy zone and sell zone! So when the price moves up it hits the sell zone when it move down it hits the buy zone. This makes for some easy and predictable trading.
Above you can see my USD/CAD daily chart. On this chart you can see that USD/CAD was trapped in a range from January 27th up to April 25th. The red dotted line on the chart is the 1.0000 psychological level. This range made for some very easy reversal trades.
If you have read my price action strategy you will know how I trade reversals so I won't go over it in detail. The basic idea behind a reversal trade is to look for a preceding trend followed by an indecision candle forming on top of support or resistance.
Above I have marked out five reversals that formed in this USD/CAD range. The first trade failed but the next four were successful. On USD/CAD I target 60 pips on a daily chart reversal as the average daily range for the pair is only 80 pips. Together these five trades made roughly 210 pips since February. While this may not seem like a lot it isn't bad for low management trades that you can spot up to 12 hours before they trigger.
Spotting a range is straight forward, I simply look for two bounces on the support (buy zone) and two bounces on resistance (sell zone). Once I see that I know that a range has formed.
Trading Range Bounces
The concept of trading range bounces is the same as reversal trading. In a range price dips down into a buy zone and reverses up into a sell zone.
You could trade every single dip and rally but this would be dangerous as you never know when the price will break the zone. If you only look for strong reversal setups forming in either the buy or sell zones then you can make some easy pips. Right now the market seems to want to range rather than rally. So have a read of my price action strategy, learn to trade reversals and make some pips!