The EASIEST Charting Strategy - Learn How To Chart Like A PRO ($SPY $SPX) #daytrading

Updated Charting Routine

In this video, the speaker discusses an updated charting routine for trading stocks. They emphasize the importance of charting in day trading and how it forms the foundation for support and resistance levels, supply and demand zones, profit targets, entry points, and overall trading plans.

Importance of Charting

• Charting is crucial for a good day trader as it provides support and resistance levels.

• Support and resistance levels help determine when to enter or exit positions.

• All trading decisions are derived from price action and support/resistance levels.

• Continuous practice is necessary to improve charting skills.

Utilizing the Top-Down Approach

• Start with the highest time frame (e.g., three-year weekly) and work down to lower time frames.

• The top-down approach provides a broader picture of stock movement.

• Levels that hit on smaller time frames reinforce the strength of support/resistance levels identified on higher time frames.

Charting Process

1. Begin with the high and low of the highest time frame (e.g., three-year weekly).

2. Work from left to right, identifying trends and significant support/resistance levels.

3. Clear support/resistance levels on higher time frames should be charted first.

4. Smaller resistance/support levels can be charted on lower time frames if they are clearly visible.

Example: Charting SPY and SPX

• The speaker demonstrates how they chart both SPY (moves in smaller increments) and SPX (moves in larger increments).

• Their approach may differ from others but has been effective for them over the past few years.

Overall, this video provides insights into an updated charting routine for traders, emphasizing its importance in day trading strategies. The speaker explains how to utilize the top-down approach, highlights key steps in the charting process, and provides an example of charting SPY and SPX.

New Section

In this section, the speaker discusses charting levels of support and resistance on a specific trend.

Charting Psychological Levels

• The speaker identifies the strongest pullback in the trend and adds a level of resistance at around 320 on SPX. This level is considered a psychological whole dollar level.

• Instead of charting small increments on a higher time frame, the speaker focuses on charting big psychological levels, such as whole dollar levels.

• The speaker explains that when a stock pulls back, it should touch the previous resistance level (now acting as support) if the trend continues.

New Section

In this section, the speaker discusses charting smaller increments and resistance/support levels during pullbacks.

Charting Increments and Support/Resistance Levels

• The speaker mentions that after charting big psychological levels, they start charting smaller increments like 50 cents.

• When a stock pulls back, it should have both resistance and support levels. If it doesn't pull back to the previous resistance (now acting as support), it creates a new level of support.

• The speaker emphasizes the importance of identifying breakout points where resistance becomes support or vice versa.

New Section

In this section, the speaker discusses charting levels of resistance and support during breakouts.

Identifying Breakout Points

• The speaker charts a new level of resistance at around 350 after a breakout occurs.

• They also chart the top of a wick as another level because it can act as both resistance and support.

• Breakout points create new levels of either resistance or support depending on their direction.

New Section

In this section, the speaker discusses identifying key levels of support and resistance during an upward trend.

Key Levels of Support and Resistance

• The speaker charts a level of resistance at 395 during a pullback.

• If the stock doesn't pull back to the previous resistance (now acting as support), it creates a new level of support.

• They chart the bottom of a wick at around 370 as another level of support, considering multiple candles touching that level.

• Another level is charted at the base of a candle around 378, which also has multiple candles touching or holding above/below that level.

New Section

In this section, the speaker discusses identifying levels of support and resistance within a range.

Identifying Support and Resistance in a Range

• The speaker identifies the bottom of the range as a key support level, charting it at 410 due to its psychological significance.

• They consider both the base and wick of candles when determining levels, looking for multiple candles touching or holding above/below those levels.

• The trend ends around 423, where they chart another level.

The transcript provided does not cover all sections mentioned in the instructions.

Analyzing Support and Resistance Levels

In this section, the speaker discusses how to identify and chart support and resistance levels on a smaller time frame. They emphasize the importance of charting levels that have been touched multiple times, as these are more significant.

Identifying Support and Resistance Levels

• The speaker charts the 415 level as support because multiple candles closed above it, even though they attempted to break below.

• They also chart the 423 level as resistance, which later becomes support when it is broken.

Creating an Uptrend

• The speaker identifies a significant resistance at the 453 level, where the stock pulled back.

• They note that when a resistance is broken, it should be retested as support.

Additional Support and Resistance Levels

• The base of certain candles indicates support levels at 426 and 433.

• The top of other candles suggests a resistance level at 445.

• A clean area of resistance is observed around the 470/471 level.

Retesting Support and Resistance Levels

In this section, the speaker explains how previous support levels can become new areas of resistance or vice versa. They also provide tips on managing chart overload by re-charting stocks periodically.

Retesting Support and Resistance

• When a stock breaks out of resistance, it often pulls back to retest that previous resistance as new support.

• Similarly, if a stock moves down, previous support can become new resistance.

Managing Chart Overload

• The speaker advises against over-charting random levels that have only been touched once. Significant levels should be those touched multiple times on multiple time frames.

• Re-charting stocks every three to four months or when there are too many unreadable or overwhelming levels is recommended.

Additional Support and Resistance Levels

In this section, the speaker identifies more support and resistance levels based on price action.

Charting Additional Levels

• The speaker charts the 476 level as resistance, which is later retested as support.

• They also identify a level at 449 based on a random wick.

• A high at 473 is charted as resistance, along with a base candle level at 420.

These notes provide an overview of the key points discussed in the transcript.

Charting Levels on the Left Side

The speaker discusses charting levels on the left side of the candlestick chart.

Charting Support and Resistance Levels

• The speaker identifies a good level at 462, which has been rejected multiple times.

• The trend is down overall, with resistance starting around 380.

• Psychological levels like 385 are also considered for charting.

• The base of candles and gaps in the chart are marked as additional levels, such as 390.

Identifying Support and Resistance Levels

The speaker continues to identify support and resistance levels on the candlestick chart.

Additional Support and Resistance Levels

• A new support level is identified at 365, which is adjusted to 366 later.

• The base of a candle at 362 is marked as a level of support.

• Previous resistance at 433 becomes a target for upward movement.

Finding In-Between Levels

The speaker looks for significant support and resistance levels between the main levels already identified.

Identifying Additional Levels

• A level at 407 is marked based on the base of a candle.

• Another level at 373 is identified by extending it to the left side of the chart.

• The base of candles at 357 and a body of a candle at 388 are also marked as levels.

Fine-Tuning Support and Resistance Levels

The speaker fine-tunes support and resistance levels by identifying additional significant points on the candlestick chart.

Refining Existing Levels

• A Wick at 375 is added as a level by extending it to the left side of the chart.

• A level at 388 is identified based on the top and base of a candle.

• The speaker explains their preference for whole dollar levels or 0.5 levels rather than fractional levels.

Psychological Levels and Finalizing Charting

The speaker discusses psychological levels and finalizes the process of charting support and resistance levels.

Psychological Levels and Final Touches

• A level at 405, which is a psychological level, is marked as resistance/support.

• Additional significant levels between main levels are identified, such as 382.

• The speaker mentions their strategy for entering and exiting positions based on these levels.

Completing the Weekly Time Frame

The speaker concludes the process of charting support and resistance levels on the weekly time frame.

Finalizing Weekly Chart

• The high point on the chart is already marked as a level.

• Additional significant points between main levels are identified, such as 382.

This summary provides an overview of the key points discussed in the transcript. For more detailed information, please refer to the specific timestamps provided.

New Section

The speaker discusses the downtrend on the yearly time frame and identifies support and resistance levels.

Downtrend Analysis

• The speaker identifies a downtrend on the yearly time frame.

• Support is found at 437 and 438 levels.

• Resistance is observed at 440 level.

• A base of candles indicates a psychological level of support at 440.

• Additional support is found at 412, while resistance is seen at 417.

New Section

The speaker continues to analyze support and resistance levels as the price moves up and down.

Support and Resistance Levels

• Resistance is identified at 408.50 level, with potential additional resistance at 407.50.

• A gap down creates a new level of support at 401.

• Another gap down below 390 has already been charted.

• A Wick indicates a support level at 382.

• A base of candles suggests a resistance level at 391, with an upper Wick indicating another level at 393.

New Section

The speaker explains their approach to charting different accounts for scalp trading and analyzing overall trends.

Charting Accounts

• The speaker uses two different charting accounts: one for scalp trading with all levels posted, and another for analyzing overall trends without all levels charted.

• The second account focuses on price action, trend lines, and potential pattern plays.

• The levels provided in the transcript are used for entry, exit, and profit targets.

New Section

The speaker discusses the process of charting support and resistance levels on different time frames.

Charting Support and Resistance

• Starting from the daily time frame, support and resistance levels are identified.

• Moving to the four-hour time frame, high and low levels are charted.

• The same process is repeated for the weekly time frame.

• On the hourly time frame, high and low levels are charted along with additional levels as needed.

New Section

The speaker explains how pre-market levels can be added based on price movement.

Pre-Market Levels

• Pre-market high and low levels can be added as gray shaded areas on the chart.

• For example, a pre-market high of 400 and a pre-market low of 395.50 can be charted.

Understanding Intraday Levels

In this section, the speaker explains how to identify and utilize intraday levels as support and resistance for potential trading opportunities.

Identifying Intraday Levels

• Intraday levels are formed when a price level is touched multiple times, such as two or more touches.

• These levels can be observed on timeframes like five minutes, one minute, or two minutes.

• The speaker suggests that the five-minute and two-minute timeframes are usually the most effective for identifying these levels.

Utilizing Intraday Levels

• Once an intraday level is identified, it can be used as a support or resistance level for entry or exit points in trading.

• The speaker recommends tracking these levels on 15-minute or lower timeframes.

• Examples of utilizing intraday levels include taking trades on breakouts or rejections at these levels.

Charting Support and Resistance Levels

This section focuses on charting support and resistance levels using intraday levels identified earlier.

Support and Resistance Levels

• Intraday levels that have been touched at least twice can be considered as support and resistance levels.

• These levels can serve as entry or exit points for potential trading opportunities.

Charting SPX (S&P 500 Index)

Here, the speaker explains how to chart the SPX (S&P 500 Index) using similar techniques discussed earlier for individual stocks.

Charting SPX

• Start by analyzing the three-year weekly timeframe of SPX.

• Identify the high and low points to establish a range.

• Move to lower timeframes like hourly, 15 minutes, and five minutes while charting whole dollar, 10-point, or five-point increments as significant levels.

Similarities Between SPX and SPY

This section highlights the similarities between charting SPX and SPY (S&P 500 ETF).

Price Action Similarities

• Both SPX and SPY exhibit similar price action due to their correlation with ES futures.

• The same charting techniques can be applied to both, following the same rules of identifying trends, support, and resistance levels.

Charting Increments on SPX

Here, the speaker explains how to chart increments on SPX based on its specific price movements.

Charting Increments

• On higher timeframes, round levels to whole dollar, 10-point, or five-point increments.

• As you move down to lower timeframes like hourly, 15 minutes, and five minutes, focus on whole dollar levels.

• Psychological levels such as 100-point or 50-point increments are also significant.

Comparing Charts: Spy vs. SPX

This section compares the charts of Spy and SPX side by side to highlight their similarities in price action.

Price Action Comparison

• By comparing the three-year weekly charts of Spy and SPX together, it becomes evident that they exhibit similar price action due to their correlation with ES futures.

• The same charting techniques can be applied to both securities.

General Charting Guidelines

The speaker provides general guidelines for charting any security using a top-down approach.

Top-Down Approach

• Start with the highest timeframe available (e.g., three-year weekly) and identify trends, support, and resistance levels.

• Move down to lower timeframes while adjusting the level of detail based on the increment size (e.g., whole dollar or smaller increments).

Identifying Support and Resistance Levels

This section explains how to identify support and resistance levels based on the stock's price action.

Uptrend and Downtrend

• In an uptrend, identify the top of the trend as resistance and the bottom as support.

• In a downtrend, identify the bottom of the trend as support and the pullback level as resistance.

• When a stock breaks a level of resistance, that level becomes support on its way back down. Similarly, when it breaks a level of support, that support becomes resistance on its way back up.

Conclusion

The speaker concludes by emphasizing the importance of being mindful of support becoming resistance and vice versa while trading and charting.

Key Takeaways

• Support and resistance levels play crucial roles in trading decisions.

• Charting should follow a top-down approach, starting from higher timeframes.

• Psychological levels like whole dollar increments are significant.

• Understanding price action similarities between different securities can enhance charting skills.