Technical Analysis Using Multiple Timeframes

Follow me on twitter @alphatrends

Brian Shannon www.alphatrends.net
Does the Market Seem More Volatile Lately?

Brian Shannon www.alphatrends.net

Brian Shannon www.alphatrends.net
 Market Structure:
Trend Trading

Where the big money is made…

Brian Shannon www.alphatrends.net

 TREND TRADING

• Stocks follow the path of least resistance.

• Big money (wealth creation) is made by

following the primary trend.

• Longer term trend is nothing more than the

sum of shorter term trends; therefore, the
short term trend leads the longer term trend.
• Buy strong stocks - When?

• Sell weak stocks – When?

Brian Shannon www.alphatrends.net

 How do we make money trading?

There is only one way…

Long position:
Others must buy after we do.

Short Position:
Others must sell after we do.

Brian Shannon www.alphatrends.net

In order to make money we have to:

ANTICIPATE!

Price charts reflect the collective psychology of all

participants in the market. As we know, the only
true constant in the market is that participants’
actions can be predictable.

Brian Shannon www.alphatrends.net

Cycles of Psychology

Brian Shannon www.alphatrends.net

 3

2
2
1
4

1- Accumulation 3- Distribution
2- Markup 4 - Decline

Brian Shannon www.alphatrends.net

 Focus On the STAGES . . .

Brian Shannon www.alphatrends.net

Brian Shannon www.alphatrends.net
. . . Which Cycles on a Daily Timeframe

The astute trader should consistently

ask him or herself what stage the chart
in question is in.
The trader should always be looking for
clues the market leaves behind.

Brian Shannon www.alphatrends.net

as well as 65 Minute time frame

Brian Shannon www.alphatrends.net

 a 10-Minute Timeframe

Brian Shannon www.alphatrends.net

and even a 1-Minute time frame!

Brian Shannon www.alphatrends.net

Brian Shannon www.alphatrends.net
 Trend Alignment
Dow Theory- Underlying Premise of Technical
Analysis
3 Types of Price Trends
1- Primary Movements- compared to oceanic
tides, these trends can last for years
2- Secondary Movements- compared to the
waves, they may last 2 weeks to 3 months
3- Short Term Trends- insignificant ripples last
less than 2 weeks

Brian Shannon www.alphatrends.net

 Combining Timeframes

• Long term timeframe to find potential

candidates
• Intermediate term timeframe to identify key
support and resistance levels for risk/ reward
determination
• Short term timeframe for fine tuning entry and
exit decisions

Brian Shannon www.alphatrends.net

 Swingtrade Timeframes

• What is the primary trend- daily chart

• What is the intermediate term trend- 65/30

minute chart

• What is the short term trend- 10/5/2

minute chart

Brian Shannon www.alphatrends.net

BE PREPARED FOR ANYTHING!

Know in advance where to admit you are wrong

Use stops on every trade!

Brian Shannon www.alphatrends.net

 Before Entry Answer 2 Important Questions

1- Where has stock come from?

Has it expended a lot of energy, is it extended, what is
volume pattern, where does stop go?

2- Where does it have the potential to go

before likely resistance (long) or support
(short) is found?
Is there enough profit potential relative to perceived
risk?

Brian Shannon www.alphatrends.net

 TRADING LONG

PLAN OF ACTION FOR TREND PARTICIPATION

Primary Trend (Daily Timeframe)

Stage 2 UPTREND –buy candidate
Secondary Trend (65/30 minute)
Stage 1 Accumulation –Anticipate (Plan your trade)
Stage 2 Uptrend – Participate (BUY!)
Stage 3 Distribution – Exit (SELL)
Stage 4 Decline - Avoid
Short Term Trend (10/5/2 Minute)
Fine tune your timing

Brian Shannon www.alphatrends.net

Brian Shannon www.alphatrends.net
Brian Shannon www.alphatrends.net
Brian Shannon www.alphatrends.net
 SHORT SALES

PLAN OF ACTION FOR TREND PARTICIPATION

Primary Trend
Stage 4 DOWNTREND
Secondary Trend
Stage 1 Accumulation –Exit (Cover Short)
Stage 2 Uptrend – Avoid
Stage 3 Distribution – Anticipate (Plan your trade)
Stage 4 Decline – Participate (Sell Short)

Short Term Trend

Fine tune your timing
Brian Shannon www.alphatrends.net
Brian Shannon www.alphatrends.net
Brian Shannon www.alphatrends.net
Brian Shannon www.alphatrends.net
Quick Word About Moving Averages

- Not a system, merely reference point..

constant to compare price to

- Where is stock (market) in reference to key

moving average on different timeframes?

- What is the direction of that moving average?

Brian Shannon www.alphatrends.net

Weekly Timeframe – 40 week (200 day most important)

Brian Shannon www.alphatrends.net

Daily Timeframe – 50 Day (10 week) most important

Brian Shannon www.alphatrends.net

65/30 Minute Timeframe – 5 Day (conversion required)

Brian Shannon www.alphatrends.net

1 Minute- VWAP most important

Brian Shannon www.alphatrends.net

www.technicalanalysisbook.com

Brian Shannon www.alphatrends.net