Wait for price to break above the intraday opening range or local micro-resistance. Ensure volume expands on the breakout, confirming active participation.
By answering "Yes" to all four, you move from gambling to trading with a statistical edge.
This methodology does not rely on predicting the future. Instead, it focuses on managing risk and aligning trades with the overarching market structure. By looking at a security through different lenses of time, traders can eliminate market noise, uncover high-probability setups, and drastically improve their execution timing. The Core Philosophy: Only Price Pays
By analyzing multiple timeframes, the trader gains a more comprehensive understanding of the market trend and potential trading opportunities. In this case, the trader may consider buying the stock based on the bullish breakout pattern on the hourly chart, while also considering the longer-term bullish trend on the monthly chart. technical analysis using multiple timeframes brian shannon
: Executes the order with tight, well-defined stop losses. 2. The Four Stages of the Market Cycle
Avoid heavy long positions; wait for an official breakout. Stage 2: Markup (The Bullish Trend)
Brian Shannon prescribes a strict, disciplined workflow: Wait for price to break above the intraday
Most traders are linear thinkers. They look at a daily chart and see an uptrend, so they buy. Brian Shannon argues that this is like navigating a cross-country road trip using only a satellite image of the Earth. It gives you the big picture but misses the potholes, gas stations, and traffic jams.
Technical Analysis Using Multiple Timeframes: The Brian Shannon Method
Price breaks below major support levels, printing lower highs and lower lows. Moving averages slope downward and act as resistance. This methodology does not rely on predicting the future
Aggressively look for long setups on pullbacks or consolidation breakouts. Stage 3: Distribution (The Top)
Look for a clear, established trend (e.g., price above a rising 200-day Moving Average). 2. The Intermediate Timeframe (ITF): Setting the Scene
– The market is flat or "basing" after a decline. Buyers and sellers are in equilibrium. Stage 2: Markup
: The price stays consistently above a rising 20-day, 50-day, and 200-day moving average. Action : Buy pullbacks to support or buy breakouts. Stage 3: Distribution (The Top)
By using this top-down approach, the trader enters a position aligned with the massive institutional momentum of the daily chart, but with a stop-loss dictated by the 5-minute chart. This maximizes the risk-to-reward ratio. Summary of Benefits