To apply multiple timeframe analysis, traders typically use a combination of short-term, medium-term, and long-term timeframes. The specific timeframes used may vary depending on the trader's strategy and goals. Here are some common timeframes used in multiple timeframe analysis:
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HTF trend & structure
The quest for a definitive edge in trading often leads to Brian Shannon’s acclaimed book, . This foundational text provides traders with a structural framework to navigate the financial markets across various periods. To apply multiple timeframe analysis, traders typically use
Shannon argues that traders often fail because they only look at one chart. If you only look at a 5-minute chart, you might think a stock is crashing. However, if you look at the daily or weekly chart, that "crash" might actually be a (a potential buying opportunity). Conversely, a breakout on a 5-minute chart might be a bull trap if the higher timeframe chart is in a downtrend.
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If you are serious about trading, focus on the of these timeframes. Start by analyzing your favorite stock on a Monthly, Weekly, and Daily scale. Do the trends agree? If not, you might just be looking at a "trap." This foundational text provides traders with a structural
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By aligning these three timeframes, you significantly increase your win rate and ensure you are never trading against the broader market momentum. The Four Stages of the Market Cycle
– Sideways movement after a downtrend; price remains below key moving averages as "smart money" builds positions. However, if you look at the daily or
Before diving into the technical analysis, it is important to understand the mind behind the method. Brian Shannon, CMT (Chartered Market Technician), is an American author, equity trader, and technical analyst born on November 16, 1967.
+--------------------------------------------------------+ | WEEKLY CHART | | (Macro Trend: Strong Secular Uptrend / Accumulation) | | | | +----------------------------------------+ | | | DAILY CHART | | | | (Intermediate: Pullback / Secondary) | | | | | | | | +------------------------+ | | | | | INTRADAY CHART | | | | | | (Execution: Trigger) | | | | +-------+------------------------+-------+ | +--------------------------------------------------------+ The Three-Tier Alignment
Trades should ideally be taken in the direction of the higher-timeframe trend while using lower timeframes for "low risk, high probability" entry points.
Shannon's book emphasizes the importance of using multiple timeframes in technical analysis. He argues that analyzing a security's price movements on a single timeframe can be limiting, as it may not capture the full range of market dynamics. By using multiple timeframes, traders and investors can gain a more nuanced understanding of a security's trends, patterns, and potential trading opportunities.
One of the most referenced sections of the book is Shannon's breakdown of the market cycle. He categorizes price action into four distinct phases, borrowed and adapted from classic Dow Theory and the teachings of Stan Weinstein.