Have you ever taken the time to “zoom out” on your charts, and have a look at things from a “monthly perspective”?
Same formations. Same patterns etc, only in that “each candle” represents an entire months trading information, as opposed to the 1 hour, 4 Hour ,daily or even weekly charts you may regularly peruse.
Monthly charts provide a “macro view” to say the least and are “extremely important” to take into consideration.
You’ve now come to understand “a reversal” formation, as well the “pin bar”, and can now likely pick out a “swing high” or “swing low” in price action – at a moments glance. You’ve also come to recognize the “value” in identifying these “patterns of reversal” – as they provide for some pretty outstanding trade entries.
Now consider the implications when identifying such reversals on a “monthly time frame”.
Price action has moved higher in a “succession of higher highs and higher lows” for literally months, but now suggests reversal in a “monthly variance in price”. Imagine.
That’s huge, and the implications are vast.
When an asset has “swung high” or “reversed” on a monthly time frame, you can throw your hourly charts out the widow as…..the implications of the move to follow will be reflected in “months” of reversed price action, not merely in a couple of hours or even days.
Do you have the account balance to “hold” through a move like that? Do you “doubt” the reversal pattern? The same pattern you’ve come to rely on daily, hourly? (patterns, and areas of support and resistance become much “more reliable” the larger the time frame – not less.)
The SP 500 is “a hair” shy of “monthly reversal”.