I like to do posts covering the subject of Perspective as I receive frequent comments/questions via twitter that center around the differences in this amongst traders (as you would expect).
One of the critical pieces of perspective however must include time-frame. Although 5 different traders can look at the same chart and come up with differing views, there is little doubt that if you pull out to a different time-frame – those views would start to converge.
Changing the lens helps.
To illustrate this I bring you the Hourly chart of $PPO:
After a gap down (earnings reaction), price has started to stabilize. I began to look at this for a Gap Fill trade. Seems like a reasonable 1st step in determining what my motivation for a trade entry would be. Now let’s pull out to a Monthly chart:
It seems that traders out in the time-frame have been having a field day with a short position. Ouch. It seems very reasonable to think that price will test the horizontal support line (B/O test) in the near future.
Be sure to keep a perspective that matches your time horizon for a trade. There is a higher probability success if they go hand-in-hand.