Transcription
All right, guys. So, today I'm breaking down exactly how I use my highest time frame to find me the best zones to use on my lower time frame. For example, I like to day trade mainly on the 5-minute time frame, and by using the hourly time frame to find my zones, my 5-minute win rate can go so much higher.
By drawing a zone on a higher time frame, you are chopping out a lot of the noise, and you are solely focusing on the high probability areas to get in. We're going to go through real examples step by step on the chart. So, let's get into it.
So, why am I using the 1-hour and not something like the daily monthly? Yes, you can always say I can use this one or this one or this one, but you need to be relative to the time frame you like to trade on. So, because I like to use the 5-minute for pretty much my bias, my zones, my entries, etc., I want to be relative to that.
Using the monthly paired with the 5-minute, you're going to get cooked. Using the hourly, that's perfect. And again, I want to be able to catch at least, you know, five to six trades a week uh when I'm only on for about 2-3 hours a day as well. If I use something like the monthly, the yearly, I'm never going to catch a trade. If I use something like the 1-minute, it's going to be too much noise. So, for me, the perfect sweet spot for my day trading is the 1-hour and the 5-minute, but anything matches the same.
So, I'm not just randomly picking areas, okay? Thinking, "I'm going to buy here. I'm going to sell here." No. Of course, as always, you need to find the trend. So, I can see that on this higher time frame, the hourly, we are clearly pushing higher. So, I need to look for buyers, obviously. I don't care about supply. I'm only looking for areas of demand.
Now, with the hourly, I can be a bit more fussy with uh a bit less fussy with my break structure. If you know how I read market structure on the lower time frame, we need to break big areas for it to be a break structure. This is a break structure. This is a break structure. This is not a break structure, too small. This too small. So, we only focus on the bigger areas. However, with the hourly, I can be a bit more lenient because, like I said, it's the hourly time frame. So, a small break structure on the hourly is going to look like a big break structure on the 5-minute.
So, I can see that we are bullish, and then I need to find a break structure. That's when we take a high. So, here we have taken a high. That's the first step. I want to find the aggressive move that took this high because there needs to be some sort of demand that pushed price up, pushed price lower, and then pushed price up again. You see, if price just continued higher like that, we don't have really a demand cuz we want to see where sellers stepped in, they tried, and then they failed. So, that demand beat those sellers. That's how we find a good zone. So, I do need to see that slight pullback, and not just a straight leg up.
So, here I can see we broke structure and we had that slight high low pullback before doing so. So, that's good because it gives me a bearish candle. I need a bearish candle to work with. So, I need to see what area of demand caused this higher timeframe break. And what I want to see is two steps. I want to see a swing low. Okay, and a close above the lowest bearish candle. So, where did we have a swing low before we broke this? Here. Now, do we have any other bearish candles? No. So, this is the lowest bearish candle. Have we closed above it? Yes. That's how we validate our zones. It needs to be a swing low or swing high, and then a close above the lowest bearish or a close above or close below the lowest bullish for a supply, but we'll get into that.
So, here this is a swing low, and we closed above the lowest bearish candle. So, I highlight the area, right? The high of the candle we closed above to the swing low. That becomes my demand. Now, if the second part sounds a bit tricky, let me show you exactly what I mean. Here we have a swing low. Okay. But, this is not the lowest swing low. Why? Because this swing low Oh, sorry, this is not the lowest bearish candle. Why? Because this bearish candle did not close below this bearish candle. So, in fact this here is my lowest bearish candle and I draw it from the high of the bearish candle to the swing low. And what did the price do once we closed above it? That becomes my area of demand. Price did what? Trade back into it and push us higher. Let's see what we do. Boom, 50% to the T and what? Push higher. Push higher on a lower time frame. There's the area we drew. We came exactly back into it. Push higher. So these zones are really strong. But that's what I mean when it has to be the lowest bearish candle. Can't be contained within another bearish candle's wick next to it.
So there we go. We have taken this high on the hourly. Clear uptrend. We have left a swing low. Bearish candle and we have closed above it. So I can highlight this area here. Now this is not it. I don't just randomly take a buy. Don't be stupid. Drop down to your 5-minute time frame and look for your six-step setup. What do we have? If I don't have liquidity I don't have a can't use it. I can't use every random zone. It needs to follow my six-step model. 1 2 3 4 5. Boom. This follows my six-step model. So guess what? I can use this zone here.
So once price comes and sweeps this liquidity only after sweeps it. If there's no liquidity in this zone I cannot use it and I have to wait for a new zone to form. But boom. Now we've swept liquidity. Obviously I need some sort of confirmation that we do indeed want to bounce. I have no confirmation so far. Let's see. Okay, nice. We have now got a good recovery inverse this gap. Inverse this gap. That tells me that this is now a good long to look for my buy in. Stop loss below targeting higher prices. Boom. TP smashed. So, it's the exact same thing, but you're just using a higher time frame to show you what the best zones are.
Wait, same thing on this chart. So, again, when you go on a higher time frame, we do want to gauge some sort of bias. Now, is this buy or bearish? Is this bullish? We kind of can see what we are respecting and disrespecting. Well, we have bearish fair value gap here. We have tapped into that and respected it. So, it's not hard to see that this higher time frame is really, as long as this higher holds, respecting bearish arrays. And my target would kind of be these lows down here. So, I'd be bearish.
Now, if I'm bearish, where can I find a good zone? Well, this is when I need, okay, a swing high. And a close below the lowest, sorry, the highest Oops. Can't spell. bullish candle. So, where do we have a swing high? We have a swing high here. But, is this a bullish candle? No. So, I always go to the left. Where's my bullish candle? We have this bullish candle here. Did this bullish candle close above these gap these bullish candles? Yes. Can you see it's not contained within another bullish candle's wick. So, this is my highest bullish candle. I don't need to look at a candle prior. For example, if I didn't have this, right now, if we look at these bullish candles, this is contained within this, which isn't contained with this. We haven't had a bullish candle close above this bullish candle. So, this would be my highest bullish candle. What I'm looking for a close below would actually have to close below this bullish candle, not these two. Okay, so when I play it back to where we were, okay, we established that this is my highest bullish candle. So, we have to close below the lowest point of here, which is a not wick close. Boom, we close below that. So, guess what? I can now highlight the low to the high as my area of supply.
Now, let's drop down to the 5-minute and let's look for where we have a six-tap. Well, this is our zone. Do we have any liquidity? Yes. Here. So, I can mark this as my one, two, three tap lower low. Here again, no liquidity, we could not use this. Let's wait for a sweep. It doesn't sweep something, all right? It doesn't always come back, but if it does, perfect. Now, we have swept this. Again, I can look for some sort of confirmation. Let's see. I'm watching that this fair value gap failing to put in a new high. And if we can stop this fair value gap from making a new high and breaking it, nice. I like that rejection there as well. I'm happy to enter these shorts. Stop loss above. Target lower prices. Again, we can really target this low, that hourly low that we were saying. But I'll take most of my profit at this low here. And boom, what do we do? We dump.
If we go back to the hourly, you can see we had that bearish bias. We're expecting this low to get taken. As we said, came back into here. Boom, and now we have, for example, another swing high here. All right? This is also the highest bullish. I can mark this as my new area and do what? Wait for a price to trade into that. Again, I need to see if I have a 5-minute six-tap. Okay, this is interesting. This here, I don't have a six-tap. Look, this is the area. But there's no liquidity in this leg at all. Unless we form a mini break structure below that. Now, I cannot use this because no liquidity, I just can't use the area. It needs to still fit that same criteria.
Let's keep it simple. Let's doesn't overcomplicate it, and it keeps it so, so effective. It's actually what I've been going through a lot with my one-on-one mentorship students, showing them exactly how going through loads of price action. One member actually back tested it and got 10 wins out of 10 using these exact concepts shown. If you do want to join the one-on-one where it's guaranteed profitability, or you want to join the premium Discord where you can watch me live stream every day, etc., both the links are in the description below. If you did like this video, appreciate any likes, comments, subscribes as always. Any questions, drop them in the comment section below. And apart from that, I'll catch you in the next one.