Technical Analysis Using Multiple Time Frame By Brian Shannonpdf Work File
The 50-day and 200-day Simple Moving Averages (SMA).
Used for precision entry and risk management.
It was a typical Monday morning for John, a trader who had been struggling to find consistency in his trading decisions. He had been using a single time frame to analyze the markets, but was finding it difficult to get a clear picture of the trend. That was when he stumbled upon the work of Brian Shannon, a well-known technical analyst who emphasized the importance of using multiple time frames to analyze the markets.
| Time Frame | Purpose | Typical Period (Swing Trading) | | :--- | :--- | :--- | | | Define the overall trend, major support/resistance zones, and market context. | Weekly | | Intermediate (Medium) | Identify the tradable trend, pattern formations, and logical entry/exit zones. | Daily | | Short-Term (Lower) | Fine-tune entries/exits, spot reversals, and manage intra-trade risk. | 60-min or 15-min | The 50-day and 200-day Simple Moving Averages (SMA)
| Stage | Phase Name | Description | Action for Trader | | :--- | :--- | :--- | :--- | | | Accumulation | A downtrend ends, and buyers begin to wrestle for control. Price moves sideways, and volatility contracts. There's no clear trend, so trading is avoided. | Anticipate / Avoid | | Stage 2 | Markup | Buyers have won. The path of least resistance is higher. The stock establishes a pattern of higher highs and higher lows . The trend is up. | Participate (Long) | | Stage 3 | Distribution | After exhausting most demand, sellers become more aggressive. The market turns neutral, often forming a sideways pattern similar to Stage 1. | Exit / Anticipate | | Stage 4 | Decline | The lows of Stage 3 are breached. Price breaks lower, leading to a pattern of lower highs and lower lows . The bear market has arrived. | Participate (Short) |
After a prolonged downtrend, the asset stops making lower lows and begins moving sideways. Institutional smart money quietly builds positions here. Price moves back and forth across a flattening 200-day moving average. Volatility drops significantly. Stage 2: Markup (The Uptrend)
The magic lies in the alignment of these timeframes. When the intermediate trend aligns with the higher timeframe trend (e.g., both are bullish), the odds of a successful trade increase dramatically. This is why Shannon is known to watch a . He had been using a single time frame
On the daily (macro) chart, the 20-day exponential moving average (EMA) and 50-day simple moving average (SMA) act as the definitive trend filters.
While the multi-timeframe concept is powerful on its own, Shannon pairs it with specific tools to enhance precision. Two of his most renowned indicators are the and the 5-day moving average .
The downtrend takes over. The price makes lower highs and lower lows, tumbling below a declining moving average as panic selling sets in. | Weekly | | Intermediate (Medium) | Identify
If you are trading against the higher timeframe trend, you are essentially trading against the "big money" players, which is a recipe for consistent losses. The Three-Timeframe Approach
+-------------------------------------------------------+ | WEEKLY CHART: Establishes Primary Trend Direction | +-------------------------------------------------------+ | v +-------------------------------------------------------+ | DAILY CHART: Maps Key Support, Resistance & Patterns | +-------------------------------------------------------+ | v +-------------------------------------------------------+ | INTRADAY (5/15M): Refines Entry & Tightens Stop-Loss | +-------------------------------------------------------+ The Four Stages of the Market Cycle
Finds the exact trigger for entry and determines stop-loss placement.
