Hi guys and welcome to today’s video. It’s me, John Kibbler, Head Currency Analyst at Blueberry Markets.
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In this video, we are going to discuss the importance of daily closes. You can see here, I have a Currency Heat Map, and I’m going to highlight EUR/CHF because EUR/CHF has outperformed expectations this week.
But at the start of every week, I’ll show you the strength and weakness Table. I then pair the currency pairs and then see if I should be looking for buying opportunities, selling opportunities, or if the markets are in the range.
EUR/CHF was on the radar because EUR had been holding strength. It wasn’t the strongest currency of last week. I didn’t change on the strength and weakness chart, but the Swiss were losing value. If a currency is weaker, I’ll grade that as a potential area of interest. I wanted to look to buy EUR/CHF.
It was an opportunity to start looking at, and then what I look for is the daily closes. You can see it here on Monday. I’ve coloured this square in blue, that tells me that the market closed bullish on Monday. Then, what I like to do the next day is look for buying opportunities.
Suppose I go into this EUR/CHF chart, let’s build a bigger picture: the price came into this area last week, this previous low, rejected, then gave us a false breakout. On Monday, which is this candlestick here, the price rallied and took out the high, there. Now, when that happens, the market is forming a higher high. We’re starting to find that trend again.
The next step for me, once I see that daily close, there, is to go down into a four-hour timeframe and look for support and resistance levels. If I drop down into a four-hour, we can see there’s one or two support or resistance levels. Firstly, I like to look at the previous breakout area, which is here. Secondly, I like to find a little bit of an area slightly higher up somewhere, like here. As soon as the price gets back into this level, we can look to execute positions, and we can talk about looking for those change in cycle patterns.
If I jump down into the 15-minute timeframe and go all the way back here, we get one of those patterns. Now, it’s not cleanest, but when we look for double bottom patterns, we look for inverse head and shoulders patterns, and we look for changes in the cycle where the market may rally up. Do something like this or break a previous high.
What we’ve got, here, is the market breaking a previous high. The market drops down, rallies up, then takes out and forms a new high. That, to me, is an opportunity to go long. We would have gotten long in here, stop losses below the low, look for the market to rally. The important thing to do is to look at our daily timeframe and wait for those daily closes to be in our favour.
The next day, Tuesday, we had another bullish daily close. So, I did the same process: go down into that four-hour then identify an area of support and resistance, which is this high, here, on the four-hour. The next step for me is diving into that 15-minute and see if we get another opportunity and once again, the market comes up rallies. What do we get? A change in cycle, go long, stop below the lows, target up at these highs here.
All I’m trying to say is that the daily chart is really important. It can be very easy for us to get dragged into looking at the strategy on its own, whereas what you want to do is know when a strategy is more effective.
I know that my strategy is more trend-based, especially when looking for lower timeframe swing trading opportunities. It’s more of a trend-based situation; I need to find trends. I find the trends by identifying strengths and weaknesses in the markets, and then by watching the daily closes. You can see here, we get that nice bullish daily close breakout, forming a new high. The next step is to watch the four-hour trend, and we can see the four-hour making nice higher highs and higher lows. All I want to do is try and buy the dips.
Consider that when you trade, you’re looking to buy into a position and think about where your strategy is best placed. How can you make your strategy more efficient? Is it a trend-based strategy? Is it a range-based strategy? How can you make that performance a little bit better?
In this video, I wanted to cover EUR/CHF and say, take a little look at the daily closes and how you can best make your strategy better.
Thanks for watching this video update. If you like it, please give it a thumbs-up, and I’ll catch you tomorrow.
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