A Helping Hand From A Daily Chart
If you are a daytrader,
you can get valuable trading setups from daily charts even though your own time
frame is only five- or three-minutes. The chart below is a daily chart of McDATA
Corp (MCDT).
As you can see, the stock has a clear resistance level near 40. Obviously,
breakout traders are looking to buy as soon as this level is penetrated.
What you want to do next is draw the resistance level of 40 from the daily chart
above into your own time frame chart. The chart below is a five-minute chart of
McDATA Corp. The first breakout attempt above 40 shortly after the open and the
second attempt around 10:30 a.m. were breakout failures. But look at the third
attempt around 12:50 p.m. It was a success. The stock rallied and hit its peak
near 43 shortly before 3:00 p.m. It was almost a 3-point gain.
Remember, daily charts can be your friend.