By Brian Shannon Technical Analysis Using Multiple Link Upd
: The book categorizes all price action into a cyclical flow:
This technique allows traders to see the true trend of the stock relative to a specific event, filtering out the noise of standard price averaging.
A foundational aspect of Shannon's approach is a shift in perspective regarding what technical analysis truly represents. He argues that "technical analysis allows you to assess your risk–reward before entering a trade", a process best accomplished by understanding the market's underlying psychology. Unlike conventional methods that focus on identifying textbook patterns (like cup and handle or head and shoulders), Shannon advises viewing them as "smoke signals—easy to become distorted by changing conditions".
The core principle of MTF is the across different time horizons. Shannon argues that the most powerful and reliable trading opportunities arise when multiple timeframes are pointing in the same direction.
Shannon's primary focus is on price action, volume, and the insights revealed by combining these across different time scales. His approach is refreshingly indicator-light; he believes that too many tools lead to "analysis paralysis". by brian shannon technical analysis using multiple link
: Used to identify the "big picture" and major support/resistance levels. Daily Charts
+-------------------------------------------------------+ | WEEKLY / DAILY CHART | | [Telescope] Identifies Major Trend & Market Stage | +---------------------------+---------------------------+ | v +-------------------------------------------------------+ | 30-MINUTE / 65-MINUTE CHART | | [Bridge] Locates Recent Pullbacks & Moving Averages | +---------------------------+---------------------------+ | v +-------------------------------------------------------+ | 5-MINUTE / 1-MINUTE CHART | | [Microscope] Pinpoints Absolute Execution & Triggers | +-------------------------------------------------------+
The price breaks below support, entering a downtrend of lower highs and lower lows.
: Sideways movement where big players build positions after a downtrend. : The book categorizes all price action into
While professionals use several time frames, Brian Shannon simplifies the process for most traders using a . This is the backbone of his teaching.
The chart shows sideways movement with increased volatility. Stage 4: Decline
– The "avoid" or "short" phase, characterized by a downtrend of lower highs and lower lows. 2. The Power of Three: Aligning Your Charts
: Displays localized price patterns, breakouts, and intraday breakdowns. Shannon's primary focus is on price action, volume,
While MTF provides the strategic lens, Shannon has popularized specific tools to implement his vision effectively. He uses a combination of three key elements.
The actual trigger is a specific signal, not a guess. On a 5-minute or 15-minute chart, a combined indicator might flash a specific buy or sell signal. An example of a technical trigger is when a "L" label appears on the chart, as seen in some TradingView indicators. This "L" triggers when price reclaims the VWAP while the intermediate-term trend is bullish, providing a clear moment to enter. According to Shannon, the goal is to "buy the low-risk, high-probability setups" .
The trader risked $2.75 to make $9.75 (3.5:1 risk-reward). This was only possible because the trader linked the weekly support to the daily exhaustion to the 4-hour trigger.
: Used to pinpoint precise entry triggers, execute orders, and minimize execution risk.
Shannon posits three primary timeframes:
