Levels To Look for Entries: Weekly Hi/Lo and Monthly Hi/Lo
Hello, traders. Welcome to the Pro Trading Course, and the Fourth Module, Day Trade and Short Term Trades. In this lesson we are going to teach you how to look for entries on the weekly high and low, and the monthly high and low. Now, the entire goal of this module is to teach you how to day-trade like a professional, and we are going to teach you just that. We are going to teach you how to look for entries, where to put your exits, how to take profit like a pro, and how to grow your account on a daily basis. But we are going to start with the importance of the weekly high and lows and the monthly high and lows, all right. Then we are going to, on further lessons of course, we are going to incorporate this into your trading. So, let’s start by looking at why the weekly high and low, and the monthly high and low are so important.
Weekly and monthly highs and lows are very important turning points in your charts. The reason they are important is because they act as strong areas of support and resistance, and you can actually find confluence with your zones for smarter entries. Another reason these zones are important is because they are the range on which price is trading at that time, and this is key. They are the range in which price is trading at that time. So, if you have the weekly high and the weekly low, that is the entire weekly range in which price is trading at. So it’s basically, when price is trading near the weekly high or near the weekly low, you have to analyze if it’s possible that price is going to bounce or if it’s going to break the weekly low, for example, and make new weekly lows. Now, this is why we are going to teach you how to use this e-confluence [sp] with your technical analysis, but for the time being we are going to show you the importance of the weekly highs and lows, and the monthly highs and lows.
In strong trends it’s very likely that those zones are going to break and price will keep making new weekly and monthly high and lows. In very rangy markets these zones are perfect to play bounces from because price has been respecting them. In any case, using these levels along your normal technical analysis will yield better and more reliable set ups.
Now, let’s look at an example of how the weekly high can be traded. Let’s say that we are looking at price action at this moment in time, and price made this high, which is now the weekly high. Then price retraced all the way to this low and moved again to the weekly high, okay. What happened here is that the weekly high was rejected so this is a very good opportunity for us to go short, based on the rejection of the weekly high. Of course we have a new weekly high here, but this is just an example guys. And price came all the way down here.
Of course we have the second kind of entry that we can have using the weekly highs and lows and the monthly highs and lows. Let’s say that after this bounce, price came all the way into these lows and then broke with the weekly high making new weekly highs. Well, what happened here is that we broke with the weekly high, of course, and price will retest again before moving higher, so right here we have a long opportunity at the break of the weekly high and at the retest. So basically this is the two kinds of set ups that you can have using both the weekly high and the monthly high, and of course, if we are talking about the weekly low and the monthly low, there are bounces to the upside and breaks to the downside.
Now, let’s look at this example now. Let’s say that this is the monthly low and price came all the way to this high and then back again, and this is the price action of the second week of the month, so this basically would be the weekly low. By having the monthly low and the weekly low so close together, almost in confluence, this makes for a very interesting and a very important zone because by having these two levels around the same area, you are going to find a lot of more buyers. So what happens here is that when price comes down, tests and rejects it in this strong matter, you are going to have a great opportunity to buy this asset or to go long on this instrument just by looking at the weekly lows and the monthly lows.
Now, let’s go to the charts and I’m going to show you exactly what I mean. This is the US dollar/ Canadian dollar one-hour chart, and let me explain to you what we have here. The black line are the monthly high and the monthly low. This is an indicator that I have on my chart, I didn’t draw this line by myself. The red lines are the weekly low and the weekly high. The blue dotted lines are the previous weekly high and the previous weekly low, and the green dotted lines are the previous monthly low, and of course the previous monthly high is all the way up.
Now, you can see that between the monthly high and the monthly low, we have a range of around 670 pips, so that is the range that we are working with right now on a monthly basis. And on a weekly basis, we have a range of 410 pips. So basically when price hits this zone, you can see that we have the monthly and the weekly at the same level, when price hits this zone and rejects it very strongly, like we have right here. Let me just zoom in a little bit. You can see that price came all the way down here, rejected it, and we found a lot of buyers. So we had a bullish kind of formation of some kind formed at this level. We have a great buying opportunity and now price has moved around 213 pips, and to the high it had moved 290 pips. So you can see these zones are very important for day trading or for short term trading. Remember that we are looking at the one-hour chart right now.