Take partial profits as the stock reaches the previous daily high, and trail your stop-loss up using the rising short-term moving averages. 6. Summary of Key Takeaways
| 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 |
Volume Profile, another cornerstone of his PDF work, shows you where actual trading occurred. Shannon teaches that "low volume nodes" are areas of acceleration, while "high volume nodes" are support/resistance magnets. By comparing the volume profile on the daily versus the 4-hour, you can spot where liquidity is trapped.
Brian Shannon’s "Technical Analysis Using Multiple Timeframes" (2008) provides a framework for identifying low-risk trading opportunities by aligning market trends across different time horizons. The methodology emphasizes the use of anchored VWAP, volume, and price action to navigate market cycles and manage risk by observing structural trends from long-term to short-term. For more information, visit the Alphatrends website Amazon.com Take partial profits as the stock reaches the
When price pulls back to this "value zone" on the higher timeframe, the trader drops to the lower timeframe (e.g., 15-min) and waits for a reversal pattern (e.g., a hammer candlestick or a volume spike) to enter the trade. Shannon famously says, "Do not try to catch a falling knife; wait for the knife to hit the floor and stop bouncing." The lower timeframe trigger provides that "stop bouncing" confirmation.
Finally, drop to the hourly. This is the only time you look for a candle close.
Open the 5-minute chart when the intermediate pattern triggers a move: | Weekly | | Intermediate (Medium) | Identify
The book has become a cornerstone in trading education, earning a reputation as in the field and a place on many traders' "top 10 trading books ever written" list. It successfully demystifies complex subjects, making them accessible to traders of all levels.
Unfortunately, I couldn't find a specific PDF resource by Brian Shannon that covers his approach to multiple time frame analysis. However, you can try searching for his book, "Technical Analysis Using Multiple Time Frames" (ISBN: 978-0738660939), which explores these concepts in more detail.
For those who have absorbed the basics of the PDF, here are the advanced nuances that separate professionals from amateurs. Shannon teaches that "low volume nodes" are areas
[Earnings Gap Up] ---> (Anchor Point) \ \___ AVWAP Line acts as Dynamic Support \______ True Institutional Average Cost
Before entering any trade, Shannon mentally runs this checklist:
Volume validates price patterns. Shannon looks for a clear relationship between price expansion and volume behavior:
Overconfidence mixed with growing institutional anxiety.