Recap: Daily Timeframe Trading

The daily timeframe provides a great advantage for part-time trading and performing evening chart scans. Rollover occurs at 5 PM EST and prices normalize after 6 PM EST so you have the ability to see how the latest bar closed in near-real-time. I speculate this is because it corresponds with the futures open. In addition, most news events, including NFP, are seen as only a tiny blip on the chart.
For the past while, I've been oversteering my analysis and execution on the daily timeframe. This post is a hybrid chart & trade review as, naturally, the daily timeframe also means fewer entry opportunities. In a way, I save money on spreads, commissions, and holding costs.

My overall preference for the daily timeframe has grown. Here are a few key reasons:
  1. Less likely to miss signals when I'm not able to monitor my charts all day (nor do I want to)

  2. Reduces screen time and overall precision of timing needed in order to optimize entry plan

  3. Better risk management by filtering out intraday noise that can take out tighter stops
Let's start off with an actual trade that I'm in, a short position on EURSGD.

EURSGD Daily

The trade structure took close to three months to form. But now that it has, the reversal and swing entry signals become a whole lot cleaner. I've numbered this chart to really break down the key components.
  1. Price pushed to new highs on July 18th. The smaller bullish candle was a great indication that buying strength was likely coming to an end.

  2. The selloff and hold marks the initial lower range boundary. If a reversal were to occur, we need to see price break below this lower range boundary.

  3. The selloff in July failed to sustain and price reverted back above this level in early August.

  4. As price breaks below this historical high range again, it's a second barrel opportunity.

  5. Darvas box range forms as this consolidation allows us to establish the lower and upper range boundaries.

  6. I missed this move. Price made a very strong break lower, which is a trend continuation sign. However, the price action detailed in #7 below was another barrel attempt.

  7. Price reverted and retested the previous lower range boundary. Price continued to hold below this level for a few days, which signalled that selling pressure likely wasn't over. I took this signal as a swing short opportunity.
This EURSGD pair is one where I could potentially be scaling into for the week ahead. On the topic of daily timeframes, there was an explosive move on GBPCAD for the past several days. Unfortunately, I was unable to capitalize on this move as I didn't have any free margin at the time.

GBPCAD Daily

I follow the same process to establish the origin of the reversal.
  1. This marked a high on the daily timeframe. Although there was higher high a few weeks prior to the one I marked, it's important to keep in mind that the most recent price action will carry more weight.

  2. Price pulled back after hitting the high that I marked in #1. This marks the lower range boundary to watch out for when plotting a potential reversal trade.

  3. The breakout to the downside finally occurs and very little trade management was needed.
Although not every reversal will trade like GBPCAD, this does provide a compelling reason to trade the daily timeframe. Less active trade management is needed and the trader bears lower total trading costs since they won't have to constantly scale in and out of intraday positions.