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Sunday, November 02, 2008

15-minute charts and a repeatable pattern

The question I get most often is "do you still use 15-minute charts?". Yes - my screen always has 15- and 5-minute charts visible, as wells as a few other timeframes I might discuss in the future.

Over the course of my trading career, I have used 15-minute charts more than any other. Even if I am trading on a smaller timeframe, I still refer to it to get an idea of the bigger picture.

Friday's 15-minute chart of the ES futures shows a pattern that is repeated on a consistent basis in both my stock and futures trades (note my Fibonacci lines are plotted over the previous day's high to low):

1.) an open around the 50% level
2.) a move to the previous day's high and a pullback or chop around that level
3.) a move to the Fibonacci extension (FE), and a pullback from that level

Looking at the chart, there are several valid entries with "hammer-type" candles, offsetting candles, and - on the short side - a double failure at resistance (the FE).

This pattern also shows up frequently in reverse.



Q4 said...

Good observation, I have never look at this, do you have more charts in archive?

John said...

I am not sure if you already addressed, but what percentage of trades do you do on 15-min charts?

Great blog btw.