Summary
Highlights
The speaker recounts a past struggle where perfect-looking trades on 5-minute or 1-hour charts would fail immediately upon entry. The core problem was a blind spot to the daily chart's behavior, leading to being on the wrong side of trades despite doing everything else correctly.
To avoid failed setups, the speaker implemented a simple check: open the daily chart and look for three to five strong red or green days in a row. If there's an extended streak of red days, avoid short selling on lower timeframes. If there's an extended streak of green days, avoid chasing long setups. This is because the market has likely exhausted its immediate move, making reversals or pullbacks more probable.
After several red daily candles, attempting to short on lower timeframes often leads to immediate reversals. Similarly, after multiple green daily candles, buying on lower timeframes can result in sideways movement and pullbacks. In both scenarios, the 'easy money' part of the move is over, and the probability of a reversal or slowdown significantly increases, meaning the odds are no longer in the trader's favor.
The speaker demonstrates this technique using ES futures. After identifying six consecutive green daily candles, the focus shifts to short-selling. On the 1-hour chart, support and resistance lines are drawn. The strategy involves waiting for the price to hit the upper resistance line, which represents institutional selling points. Confirmation is sought with a red candlestick showing momentum loss, followed by an entry when the next candle breaks below its low.
Once the price reaches the upper line, one waits for a red candlestick with a top wick, signaling slowing upward momentum and seller entry. The entry is made when the next candle goes below the low of this red candlestick, with a stop loss just above it and a target at the lower support line. The demonstration shows moving the stop-loss to break-even and taking partial profits in a winning trade.
The video concludes by reiterating the importance of checking the daily chart for direction, then moving to the 1-hour chart to draw structure and wait for confirmation. The speaker encourages viewers to try this method and provides links to a weekly free gains guide for identifying liquidity zones and opportunities for live trading sessions.