How to wait for a trade #3

Find the swing low and the pullback high on the 4-hour chart

Hello. This is THE DAYTRADE.

Last time, we looked at “where we are now” on the daily chart.
This time is the next step: the 4-hour chart.

What we do on the 4-hour chart is just one thing.

Identify a pullback low or pullback high, and draw one horizontal line.

What are the pullback low and pullback high

Pullback low (during an uptrend)

In the uptrend,the lowest price that became the starting point after the last high was made.
If this low is broken below, we consider the uptrend to be broken.

Pullback high (during a downtrend)

In the downtrend,the highest price that became the starting point after the last low was made.
If this high is broken above, we consider the downtrend to be broken.

In other words, this one line isthe boundary of whether the current trend is continuing or not.

Why only one line

If you draw many horizontals, you won’t know which line is important.
The more lines there are, the more places you might hesitate at, and you’ll be unable to wait.

I useonly one line per timeframe.

• If uptrend, pullback low
• If downtrend, pullback high

As long as this one line is respected, the trend is considered to be continuing.

How to find it

① Decide whether the 4-hour trend is up or down

Decide by higher highs and higher/lower lows.

② Find the last wave that updated the high (low)

If up, the most recent wave that created a new high.
If down, the most recent wave that created a new low.

③ Draw the horizontal line at the starting point of that wave

The starting low of the upward wave = pullback low.
The starting high of the downward wave = pullback high.

④ If the high (low) is updated, redraw the line

As the trend advances, the pullback low and pullback high also move.
Erase the old line and keep only one line at all times.

Verifying the connection with the daily chart

After drawing the 4-hour line, compare it side by side with the daily chart.

• If the daily and 4-hour trends are the same, the 4-hour pullback low/high is aligned with the daily trend
• If the daily and 4-hour trends differ, the move on the 4-hour chart might bea pullback on the daily chart.

When that happens, always check whether there is a nearby place where selling (or buying) on the daily chart tends to occur.

What to do today

• Decide the direction of the 4-hour chart
• Draw only one horizontal line on the pullback low or pullback high
• Compare with the daily line to see whether the trend is the same or different

Summary

• Pullback low and pullback high are the boundary of whether the current trend continues
• Horizontal lines: one per timeframe
• Draw at the starting point of the last high/low that updated; redraw when updated
• If the daily trend differs, it might be during the daily pullback (or return)

Next time: #4 “Where the higher timeframe seems to pull back (pullback) or reverse.”

Pursue accuracy over results rather than winning rate.
One line. Therefore, no indecision.

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Note: Results vary by individual, and profits or the duration to attain them are not guaranteed.
Note: Trading carries risk of losses. Results vary by individual and profits are not guaranteed.