Daily Timeframe Analysis

While often said by others, I did not really do this in 2021. What is it? Daily timeframe analysis. For this year, I aim to incorporate higher timeframe trends and structural levels in order to better develop a structural bias.

 

Last year, which was just a day ago, I relied heavily on the hourly timeframe. In fact, I rarely went up to the 4-hour. Given how I performed worse in 2021 compared to 2020, this was an indication that there were moments where I didn't filter out the noise.

Near the end of 2021, I restarted one of my CMC demo accounts to see what would happen if I solely traded off of the daily timeframe. Of course, I definitely wouldn't be doing this with my live account. I will likely continue this demo account for a few weeks just to see if taking a low effort set-and-forget approach works.

As volatility died off near the end of December, I took a few trades solely from my demo account. Since the trades are still active, here's a quick update.

USDCAD Daily

This was a Breakout Continuation play to the downside. Price stalled after a rally started on October 21st. As price broke below the 1.2778 level, I entered my short position and it didn't take long for momentum to pick up.

AUDNZD Daily

Possibly a bit premature. Price touched the 1.06125 upper level and then slowed down. This was indicated by how it failed to push to a significant high. 

I would say my mistake is entering too early. One thing that I could've done was watch for a bar to form below this level. Downside to this approach is would I still have done that if a strong bearish bar formed? Would I have waited for a pullback? 

An alternative would be to use a sell stop placement. Although my open loss isn't significant, I am racking up holding costs.

EURNZD Daily

Shorting EURNZD led me to taking on a concentrated position in NZD. This is a fakeout play that I spotted. After a spike, price broke through the 1.6636 level. My first annotation shows that price spiked higher and then quickly reversed. In other words, this is the first indication that demand or the upside is weakening.

My actual entry is based on an inside bar showing price lacking the ability to trade back above the 1.6636 level. We saw a slight acceleration where price appeared to sell off. However, the last candle put me back in a small loss due to short positions closed out at the end of the year.

For the year ahead, I won't be trading exclusively off of the daily timeframe. However, I will be using it more to identify and track pairs in play, which I previously only classified over on the hourly timeframe.