At the beginning of each month I like to review the weekly candlestick charts for all of the markets that I follow, to see which ones are showing up trends, or down trends, or no clear trends.
As I have stated previously, as a trader I take entry signals from the hourly candlestick charts. I like to take signals on the hourly chart which align with the trend on the daily chart.
So why am I interested in the weekly charts? Simply, they tell me which way the tide is headed for each market.
If there is a clear trend at weekly chart level, I know (1) to position myself with that trend when planning trades at daily and hourly time frames, and (2) that I must not trade against that weekly chart trend.
If there is no clear trend at weekly chart level, I can look at the daily and hourly charts for trends to trade in either direction, using reduced risk capital on those trades compared to trades on markets that are trending on the weekly chart.
Ideally I will commit all my risk capital to trades on markets that are trending in the same direction on their weekly, daily, and hourly charts, in which case I can simply watch the trendless markets, without commiting risk capital to them. At times though, there are few enough strongly trending markets that I will trade the markets that are trendless on their weekly charts.
What do the weekly charts currently show?
- S&P 500 no clear trend
- ASX SPI 200 no clear trend
- China H-shares no clear trend
- India Nifty 50 no clear trend
- Nikkei 225 no clear trend
- FTSE 100 no clear trend
- EUR/USD up trend
- AUD/USD up trend
- GBP/USD no clear trend
- Gold up trend
- Silver no clear trend but bubble finished
With only three of the above markets showing weekly chart trends, and with none of those markets currently trending in the same direction on all of their weekly, daily, and hourly charts, I know to be cautious coming in to July. I also know that trendless periods give birth to trending periods, as surely as night follows day. The markets will be more easily tradeable at some point in coming months than they currently are, so I must keep as much powder dry as possible, til clearer opportunities arise. My inclination is to continue trading and acting on trading edges, but with reduced risk capital per trade, until the trends are aligned on the weekly, daily, and hourly charts.