The Daily Chart is King!

Yes, that’s right; the daily chart should be the chart in which you focus most of your attention on as it forces you to see what’s going on in the big picture! Starting out looking at charts can be so daunting as there are so many different timeframes in which you can view so it’s hard to know which one to focus on. Let us make it simple for you – Focus your attention on the daily timeframe first!

The daily chart is the most looked at timeframe amongst traders all around the world and for good reason. Traders are interested in daily charts as they show you how price traded between the open and close of that market in any given day. People like to talk about how much a product was up or down for the day, journalists write reports and convey how a market traded by looking at the difference between the open and closing prices for the day. These reasons all account for why the daily chart can be the most powerful chart to look for trading opportunities on as it’s the most relevant.

We aren’t saying that your entries into markets should only be based off daily charts, but if you are entering into a trade off say the 60 minute chart or any other timeframe for that matter, you better know exactly what’s happening on the daily chart. It’s extremely important to step back and look at what’s happening in the big picture and by looking at the daily chart you can do just that. The daily chart allows you to see major trends and support and resistance levels which may have been invisible to you on lower timeframes. Take the GBPCHF daily chart below as an example. By looking at the daily chart you can get an overview of how the market has been trading. Notice also the horizontal lines which show recent levels of support and resistance.

Currently GBPCHF is showing clear momentum to the upside in the last few weeks. Price is now above the most recent resistance level which is now seen to be acting as support. This gives us indications that the price is more likely to continue higher from here. Once we have formed a bias we might start looking at lower timeframes for high probability entries. All of this information came as a result of analysing the daily chart which allowed us to see where the current momentum was and also where price was in relation to the nearest support and resistance levels.

If you take anything away from reading this, let it be that you should always know exactly how the daily chart is positioned when looking to enter into any market on any other timeframe. All hail the daily chart!

Happy Trading!  

The TWP Team