To apply this technical analysis approach successfully, follow this structured top-down routine before placing any capital at risk.
| | Timeframe | Action & Goal | | :--- | :--- | :--- | | 1. Analyze | Daily & Weekly | Identify the primary, long-term trend. Determine the direction you should be trading. | | 2. Align | 15-min to 60-min | Find a pullback or area of value within the primary trend where risk can be minimized. | | 3. Execute | 5-min | Look for price to reclaim or bounce from a level like VWAP, confirming entry timing. | | 4. Manage | All Timeframes | Set a logical stop loss below a key level and scale out of the trade as price moves in your favor. |
Detail how to use , a tool popularized by Brian Shannon.
On the 5-minute or 15-minute chart, look for a "higher high" to trigger the entry, confirming that the short-term pullback has ended and the daily uptrend is resuming.
Technical analysis is a method of evaluating securities by analyzing statistical patterns and trends in their price movements. One of the key concepts in technical analysis is the use of multiple time frames to gain a more comprehensive understanding of market trends. Brian Shannon, a well-known technical analyst, has written extensively on the topic of using multiple time frames in technical analysis. In this essay, we will explore Shannon's approach to multiple time frame analysis and its application in trading. Determine the direction you should be trading
The central thesis of Shannon's work is that every market move is part of a larger structure. Successful trading requires aligning the perspectives of different market participants across various time intervals.
Once you have your directional bias from the higher frames, move to the intermediate timeframe (e.g., 30-Minute or 15-Minute). Here, you are looking for . According to Shannon's book, you want to enter an established trend at the lowest possible risk, which usually means waiting for a pullback to support within the larger uptrend, rather than chasing a breakout.
"Is this the PDF I saw online?" Alex asked, reaching for it. "The 'Free 102' version everyone's looking for?"
Enter trades at lower-risk areas (after a pullback) rather than chasing momentum. By analyzing multiple timeframes simultaneously
: Avoid buying the dip; focus on short-selling rallies into overhead resistance. Anchored VWAP: Shannon's Core Indicator
Shannon structures his analysis around the cyclical flow of capital through four distinct stages: Seeking Alpha Stage 1: Accumulation
: Specific strategies for recognizing and profiting from sudden price spikes caused by short sellers covering their positions. Helpful Resources & Reports
When multiple time frames show price bouncing off an AVWAP anchored to key historical events, it creates a highly reliable confluence zone for entries. Risk Management: The Ultimate Priority and 65-minute (or 30-minute) uptrend.
– Price moves sideways as shares transfer from weak to strong hands; building a base. Stage 2: Markup
– Characterized by a sustained uptrend with higher highs and higher lows. This is identified as the most profitable stage for long positions, with price staying above rising moving averages.
Look for a Weekly uptrend, Daily uptrend, and 65-minute (or 30-minute) uptrend.
By analyzing multiple timeframes simultaneously, traders can find alignment between short-term momentum and long-term trends. This alignment helps traders achieve precise entries, tight stop-losses, and optimal risk-to-reward ratios. The Four Stages of Market Structure
Used to pinpoint precise price action signals for entry and managing risk with tight stop-losses. The Four Stages of a Market Cycle
Stock has pulled back to support (e.g., rising 50-day moving average or VWAP) in a bull flag pattern.