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Intraday Chart Setup

Intraday Chart Setup

6 min read

Do you have an intraday chart setup? You’ve been dreaming of freedom for years and finally decided to try your hand at day trading; I congratulate you. Not only is day trading quite lucrative, but it can also give you the freedom to do what you want with your time. 

You’ll want to keep reading because without understanding what intraday chart setups to look for and the right trading strategy, the freedom you desire will remain a pipe dream.

If you’re day trading, an intraday chart setup will be your bread and butter. Whether using a Bollinger bands trading strategy or moving averages, you will want the right timeframe.

As we’ve mentioned in other blog posts, intraday means “within the day.” We use this shorthand term in the financial world to describe securities that trade during regular business hours.

If you are wondering, securities can be anything from stocks, futures, and exchange-traded funds (ETFs). 

Intraday also refers to the highs and lows the security makes throughout the day. Not only are these highs and lows significant, but they are also crucial to day traders who capitalize on them.

Finally, at the close of the market, traders will settle all their positions when the market closes.

But the question remains: How do I identify the correct intraday chart setups to time my entries? 

My answer is this: Price action trading. 

No, you don’t need to know all the fancy candlestick patterns. Yes, you might like the three white soldiers, Morning Star, or the hanging man pattern, and that’s ok.

An astute price action trader’s ability extends far beyond price patterns. Learning price action trading and applying it to your intraday chart setups can change your life. 

One Strategy Crucial to Your Success

Undoubtedly, price action trading is the holy grail of trading strategies for day and even swing traders. For starters, we know that with day trading, timing is crucial, and price action offers the natural tool for timing market entries.

Even when we are wrong – which happens more than you think – well-timed entries will limit our losses. Likewise, timing your entries with market tipping points makes it possible to profit from swift trades.

Here are some price action trading tips for intraday traders.

Day Trading Course Options Trading Course Futures Trading Course
DESCRIPTION Learn how to read penny stock charts, premarket preparation, target buy and sell zones, scan for stocks to trade, and get ready for live day trading action
Learn how to buy and sell options, assignment options, implement vertical spreads, and the most popular strategies, and prepare for live options trading How to read futures charts, margin requirements, learn the COT report, indicators, and the most popular trading strategies, and prepare for live futures trading

Steer Clear of Tight Congestion

No one likes to be stuck in rush hour traffic. It’s busy and noisy, people won’t let you merge, and it’s not a good situation.

The same goes for trading during congested times. The price is barely moving; there’s no chance of making money.  

A tight congestion or consolidation area hardly offers high probability trades with a solid reward-to-risk ratio. All you do is waste your time trying to squeeze a 10-tick profit from a 2-tick trading range.

The main point here is that scalping a point or two might make sense if you’re a guru like Rose. But, it can be a tedious trading strategy for beginners.

Do yourself a favor and take a break when the market is in a tight congestion phase.

Is Intraday Profitable?

When trading an intraday chart setup, we want to make money. Most new traders think about making homerun trades whenever they buy a position. However, intraday trading is all about small victories. You’re looking to make small profits on trades. Think $0.10 to $0.20 a trade. That doesn’t sound like much. But you never go broke taking your profits. And your risk management will be better with smaller profit goals.    

Tight Congestion on Intraday Chart Setup

The market is predictable, especially if you’re trading the ES or MES; it’s almost like clockwork. We see wild movements at certain times of the day, and during others, it quiets right down. The market typically enters a congestion phase in the middle of the day. 

Congestion patterns or consolidation phases happen when the market fails to close higher (lower) for at least three consecutive price bars. Similarly, once you find that the market is in a congestion phase, I suggest you stop trading.

Generally, the best time to day trade the stock market is the first hour after the opening, from 9:30 am EST to 10:30 am EST, and the last hour of the day, from 3:00 pm – to 4:00 pm EST.

Have a look at the intraday chart setup of the ES on the 10-minute chart:

Intraday Chart Setup

This chart tells us a story of a typical intraday volatility pattern.

  1. The market opened with a nice push-up.
  2. Towards midday, we start to see congestion characterized by small candle bodies. It’s smart not to look for trading setups here.
  3. We have a clear breakout with a three-candle push-up. Don’t buy at the top of the third green candle; wait for the pullback to buy. Alternatively, a more aggressive approach would be to enter at the first bull candle’s close or the second’s open.
  4. Finally, we see the market continuing upwards.

However, it’s vital to remember that the volatility patterns differ depending on the market you are trading.

Trading the Bull Push Up

I will now turn to a less conservative trading approach for those who don’t want to wait for the push-up and pull-back to enter.

In this approach, you wait for the pushdown and enter the reversal. Your cue to enter is the long lower wick on the first bull candle; this signifies buying pressure pushing the price up.

Furthermore, the bull candle closed higher than 50% of the previous bear candle. You can enter at the candle’s close or the second’s opening.

Regardless, it would be best if you were quick as the price gets rejected starting at candle 17. Confirmation of rejection is the long upper wicks. 

Intraday Chart Setup

Final Thoughts: Intraday Chart Setup

In my books, time and wealth are more valuable than money. But your freedom comes with a price. And the price you pay is in sweat equity. If you want success trading an intraday chart setup, it requires dedication, hard work, patience, quick wit, and the desire to learn. 

Successful day trading involves 10% execution and 90% patience. If you want to gain expertise in day trading, hone your trading skills, and earn freedom, sign up with the Bullish Bears today. 

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