Using The Three-Minute Chart for Setups

The Wednesday morning session action will be dictated by the slew of 8:30 a.m. ET reports, especially Retail Sales and Initial Claims. IBM gave the techs a boost late in the day, but other than that, it was a day that saw a bounce mainly because of Monday’s sell off.

Let’s look at three-minute chart setups as not to get too rusty on the plays. This is the bread-and-butter chart.

Some of the most important support and resistance levels are created by gaps! The reason I have gaps marked on all trading charts is because with these levels in the forefront I am less likely to miss reversal areas. Gaps are not marked because I fade them regularly. I will, however, put an article together in the near future explaining how I trade gaps, as I have received many, many emails concerning just that.

You can also see that when prices are trading in an identifiable range I will use Stochastics.  For the morning session, I typically measure whether prices are trading in a range by whether they are trading beyond the top and bottom pivots. My style is geared toward taking advantage of the morning session as I find that it suits my trading style best…and that I get awful tired after lunch  ;)

If I had my way, I’d insist that most traders make the focus of the day the morning session and execute the majority of their trades before 11:15 a.m. to 11:30 a.m.