Eric Evenstad
Read Time: 4 Minutes
Last Friday's bullish momentum carried over into this week as we saw three more days of buying pressure before the bears finally stepped in on Thursday and Friday.
I traded lightly on Monday and Tuesday but then I started to feel a sense of burnout on Wednesday and Thursday. It's the first time since I began trading 5 or 6 months ago that I woke up without a burning desire to trade.
I still ended up going through my trading routines and I still watched the charts, but by Friday, it was pretty clear that I needed to take a break.
So that's what I did. I took Friday off. No pre-market analysis, no trading, no looking at the charts. Nothing. Just a nice day off to recharge and spend time with my kids.
I'm hoping the break with reignite my trading enthusiasm and lead to a big week ahead but we'll have to wait and see.
Now, with all that said, I still found time to study and level up my trading skills. Here is my big takeaway/learning lesson from the week:
Every morning, during my pre-market routine, I analyze the $SPY 1D, 4H, and 1H charts. Doing this gives me a big-picture overview of where $SPY currently is on the chart and where it has come from. It also helps me identify major support/resistance levels, trendlines, and channels. But this week, my trading mentor mentioned that I should also be zooming in on the high time frame charts. In hindsight, zooming in is an obvious move but for whatever reason, it hadn't even crossed my mind to do it.
By zooming in, you're able to read the current price action, which makes it easier to predict what will happen on a day-to-day basis. Let's use the daily chart from last week as an example. If you look at the zoomed-out chart below, you'll notice a few things:
Those are great "big picture" takeaways, but they don't do a ton to help us predict what will happen tomorrow. For that, we need to zoom in. If you take a look at the zoomed-in daily chart below, you'll see the following:
As you can see, there are valuable insights to be gained from both versions of the daily chart. If you're looking at just one, you're not getting a complete picture of what $SPY is doing. And don't forget to do the same thing with other high-time frame charts. Zooming in works just as well on the 4H and 1H charts.
That's it for this week's newsletter. I hope this little lesson will help you as much as it has helped me.
Have a great week ahead!
- Eric