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Can your setups & red flags be used on intraday charts?

Constructing a clothesline oftentimes requires to check the hourly chart to make sure it connects the significant tops which could be invisible on the daily. Proper setups however are only proper on a daily chart if you are looking to capture multi-day/week/months swing moves.

Humans act in a specific way and need time to digest information. The natural day/night rhythm has a major influence on how someone acts on information. Recall the phrase “consult one’s pillow”! A proper setup, such as the Quiet & Tight (#QTS) or the classic Cup & Handle pattern, needs time to go through specific phases which are closely linked to mass psychology. A cup and handle pattern has no meaning on an intraday chart. If price goes higher it is simply a result of proper price and volume action in my opinion. The idea behind a proper cup and handle pattern is that the stock goes through several distinct phases.

Left side base decline: Selling on large volume with price dropping through key support levels in order to shake out the longs. [Big operators cash in on their previous buying campaign]

Bottom phase: Combination of shakeouts and volume dry-ups to shake the tree some more and draw attention away. [Big Operators accumulate stock silently as they absorb any continued selling]

Right side base rally: Bullish volume clues and a rather swift rally towards the highs to create some fomo eventually. [Big Operators continue their accumulation campaign and cant hide it anymore]

Sideways handle: Attention is drawn away again. [Big operators pause their accumulation to make final tests to check if sellers are truly out of the way before pushing price into all time highs thus igniting a rally driven by price chaser who can now easily push the stock higher into the vaccum of potential sellers.]

Such things require weeks and dont happen intraday. As a swing and position trader you want to follow the big operators who trade with a longer time horizon and not some day traders creating and working intraday patterns. You want to join moves initiated by -less nervous- players.

Due to going through those phases first a proper cup and handle can ignite a multi month or even multi-year rally.

The proper #QTS ideally also requires a shallow pullback into support for at least some days before the final quiet and tight day trigger event. Volume dry-ups in general however tend to precede swift price moves which also happen intraday. But then the ensuing price reaction will also only be confined to the intraday session [driven by professional day traders] and the odds are slim that it carries over into the following session.

Red flags are oftentimes a combination of daily and intraday action. This is because a red flag is raised in the heat of the action and most of the time you can’t afford to wait until the daily close without increasing “risk” to much. Watching an intraday chart in order to better identify a selling climax or buying climax makes a lot of sense. Price more often then not reacts perfectly to major PLLs or other logical support/resistance levels during a fever pitch so you want to pay close attention to those levels.

Intraday charts can help but don’t go below 15 or may 5 min!

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