Shannon warns against using too many timeframes. Three is the magic number. Using more than three (e.g., Monthly, Weekly, Daily, 4H, 1H, 15M, 5M) leads to contradictory signals. Stick to one for trend (weekly), one for setup (daily), and one for entry (60-min).
Many traders use three specific periods—long-term (daily/weekly) for trend direction, intermediate (hourly) for context, and short-term (5-minute/15-minute) for execution.
Many traders make the critical mistake of looking at a single timeframe in isolation. They might see a bullish setup on a 5-minute chart, oblivious to the fact that the stock is crashing on the daily chart. Brian Shannon’s core philosophy is built upon the concept of . Shannon warns against using too many timeframes
The benefits of using multiple timeframes in technical analysis are numerous:
Technical analysis using multiple timeframes is a powerful approach to trading that can help you make informed decisions. By following this guide, you'll be able to apply this approach to your trading strategy and improve your chances of success. Stick to one for trend (weekly), one for
Shannon emphasizes Volume-Weighted Average Price (VWAP) as an anchor for intraday trading.
Let’s apply these principles to a real trading day. They might see a bullish setup on a
"Technical Analysis Using Multiple Timeframes" by Brian Shannon, published in 2008, is a comprehensive guide to understanding market structure through top-down analysis, focusing on aligning trading decisions with higher-timeframe trends. The framework emphasizes risk management and navigating market cycles through four distinct stages: Accumulation, Markup, Distribution, and Markdown. For more details, visit Scribd .
Aim for a profit potential that is 2 to 3 times greater than the initial risk. "Technical Analysis Using Multiple Timeframes" Book Summary
This chart pinpoints exact entry and exit signals with tight risk management. Core Concepts from Brian Shannon's Approach
On a higher timeframe, a gap (area where no trading occurred) acts as magnetic support or resistance. When price returns to fill a gap on the daily chart, switch to the lower timeframe to look for exhaustion patterns (e.g., a hammer candle on the 60-min).