We don’t know the future. Luckily, to be successful in trading, we don’t have to. All we need to know is how to quantify probabilities.
In the example below we revert back to our old observation: clues markets cannot help but give away about their intentions often start to unfold on lower timeframes. Subtle clues that we can then use to exploit crowd behaviour on the HTF (trading) timeframe.
One classic example of this is watching for failure tests on lower timeframes, which may lead to the re-emergence of momentum on our higher (trading) timeframe. In summary:
watch for potential failure tests on the LTF
prepare to enter on the HTF if the LTF failure test develops into a re-emergence of momentum on the HTF.
Now, it’s easy to be smart on yesterday’s chart. But we are here talking about today’s chart. Mindful trading!
