Technical Analysis Using Multiple Time Frame By Brian Shannonpdf Top
Brian Shannon’s "Technical Analysis Using Multiple Timeframes" (2008) provides a framework for aligning trading decisions with price action, market structure, and trend analysis across short-term, intermediate, and long-term charts. The text outlines a systematic approach using the four stages of market trends and the Anchored Volume Weighted Average Price (VWAP) to manage risk and identify high-probability entries. For a direct look at the methodology, you can view the document at Scribd. Technical Analysis Using Multiple Timeframes - Amazon UK
Key Principle: Align the Trend, Time Your Entry
Shannon’s method avoids the trap of looking at a single chart. Instead, you use three key time frames to make high-probability trades:
| Time Frame | Role | Action | | :--- | :--- | :--- | | Higher (Weekly / Monthly) | Trend Filter | Defines the dominant trend (up, down, or range). Trade only in this direction. | | Intermediate (Daily) | Strategy / Setup | Identifies value zones, support/resistance, and patterns within the trend. | | Lower (60-min / 15-min) | Entry & Exit | Pinpoints precise trigger (e.g., a pullback or breakout) with tight risk. | Key Principle: Align the Trend, Time Your Entry
Part 2: The Three Pillars of Multiple Time Frame Analysis (MTFA)
According to Brian Shannon, you cannot just slap three charts on your screen and call it a day. You must understand the relationship between the time frames. Here is the breakdown of his "Top" methodology.
Core Concepts
- Trend Hierarchy: Markets operate across nested time frames. Higher time frames define the primary trend; lower time frames reveal entries and short-term structure.
- Market Structure: Identify swing highs/lows, support/resistance, and consolidation vs. trending behavior on each time frame.
- Trend Pullbacks: Use pullbacks to high-time-frame trendlines or moving averages as higher-probability entry areas.
- Confluence: Prefer setups where multiple time frames agree (e.g., higher-time-frame uptrend + intermediate pullback + lower-time-frame bullish reversal).
- Risk Management: Position size and stop placement should come from the time frame used for the trade entry, while overall trade bias follows the higher time frame.
Pillar 1: The Higher Time Frame (HTF) is the "Judge"
- Role: It tells you what to trade (Long vs. Short).
- Key Action: Look for the 20-period Simple Moving Average (SMA) slope and VWAP (Volume Weighted Average Price).
- Shannon’s Rule: Only take trades in the direction of the daily trend. If the daily chart is above the 20 SMA and VWAP, you are a "buy the dip" trader. If it is below, you are a "sell the rally" trader.
Why "Top-Down" Analysis Works
Brian Shannon’s approach is often cited by traders looking for "top" analysis because it prevents the common trap of catching a falling knife. Part 2: The Three Pillars of Multiple Time
Imagine the Daily Chart is in a strong downtrend.
- A novice trader looks at the Hourly Chart and sees a bullish candle pattern. They buy.
- Result: The Daily downtrend resumes, and the trade is stopped out.
Using Shannon’s method, the trader would have seen the Daily downtrend and used the Hourly rally not to buy, but to find a shorting opportunity (selling into strength). This aligns the trader with the dominant market force. Using Shannon’s method
The Three-Pronged Approach
Shannon typically utilizes a "Fractal" approach to market analysis. Here is how the hierarchy works:
