Hour and minute charts can be used to improve the timing of your entries (and possibly exits) when compared to taking entry (and exit) signals from daily charts. Here is an example short trade on Australian retailer Harvey Norman [HVN_ax]. The monthly chart shows HVN testing long-term support at $2.00 — the 2009 low. 13-Week Twiggs Money Flow holding below zero signals strong selling pressure, threatening a downward breakout.
The daily chart shows HVN fell as far as $1.80 in December 2011 before recovering above the new resistance level ($2.00) in January. The rallied reached a high of $2.20 but bearish divergence on 21-day Twiggs Money Flow warned of strong selling pressure. The stock reversed below $2.00 in early March — the first short signal — but prudent traders may have waited for further confirmation before taking their full position.
On the hourly chart we can see that HVN retraced to re-test resistance at $2.00, reaching a high of $2.01 before retreating below resistance to confirm the new down-trend. Short entry could be timed to enter on the next 15-minute bar following the reversal: an entry point of $1.99 compared to $1.98 using daily bars.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.