| Updated: September 12, 2025Trends from the start of the trading day – examples
This lesson will cover the following
- The first pullback during a strong uptrend is an appropriate long entry
- A trend from the start showing minimal pullbacks
- First breach of a key trend line usually does not succeed
First pullback during a strong uptrend is an appropriate long entry
On the 5-minute chart of AAPL above, we can see that the market began a strong uptrend at the start of the trading day. There was a bull channel and a breach of the bull trend line at bar 6, which constituted the first pullback in the trend. Traders probably went long on a stop a few ticks above the high of bar 6, even though it was a weak signal (a bearish close, yet still above the midpoint of the bar). More aggressive traders may have placed a limit order at the low of the bar preceding bar 6, expecting a failed breakout below the bull trend line and a move to higher price levels.
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Some traders might have considered it reasonable to go short below the opening bar of the day, as it was a bear trend bar. There was also a gap up and some distance to the exponential moving average and to the previous day’s close. However, most of these traders would not have been able to change their mindset quickly enough to reverse to a long position above bar 6. They would have waited to go long above the first pullback, and this later entry would have reduced their profits by a few points.
Small pullback uptrend day
On the 5-minute chart of J.P. Morgan Chase (JPM) we can see that the market entered an uptrend from the start of the day, characterised by small pullbacks. If all pullbacks are less than 25% of the recent average daily range, the trading day is classed as a small-pullback day. Any sideways move was a pause – and therefore a type of pullback – and a setup to go long. The breakout at bar 1 from the two-legged sideways correction was a good entry.
First breach of a key trend line usually does not succeed
On the 5-minute chart of Société Générale (GLE), bars 3 and 4 were tiny pullbacks that failed to breach a key bear trend line. The first pullback to break this line was bar 5. The first breach of a trend line often leads to another leg in the trend and therefore provides a good opportunity to enter the market. In this case, going short below the low of bar 5 would have been a profitable trade. Very often, unclear pullbacks imply that traders opposing the trend are weak, although determining which pullback is the first meaningful one is not easy.