The foundational premise of Brian Shannon’s approach is simple:
: A period of sideways price action following a downtrend where large players build positions. Price typically stays below key moving averages.
(like Thinkorswim or TradingView) that support Anchored VWAP and multiple timeframes.
Brian Shannon’s "Technical Analysis Using Multiple Timeframes" provides a foundational framework for traders, focusing on price action, market psychology, and the alignment of trends across different timeframes. The approach emphasizes utilizing the Anchored VWAP, moving averages, and strict risk management to identify high-probability trading setups. For more details, visit Amazon.com . Amazon.com: Technical Analysis Using Multiple Timeframes The foundational premise of Brian Shannon’s approach is
To make his multi-timeframe analysis visual and actionable, Shannon and his followers often use a "Trend Ribbon," typically comprised of the 10, 20, and 50 Simple Moving Averages (SMAs). When these three MAs are aligned upward (10 SMA > 20 SMA > 50 SMA), the ribbon turns , signaling a Stage 2 Markup phase where the focus should be on longs. When they are aligned downward, the ribbon turns Red , indicating a Stage 4 Decline where shorts are preferred. When they are tangled, the ribbon turns Gray , suggesting a Stage 1 Accumulation or Stage 3 Distribution zone where one should avoid trading or trade with very small size.
Drop down to the Daily chart . Confirm that the daily timeframe is also in Stage 2. Look for a stock in a clear markup phase. Now, instead of buying at the high, you are looking for a pullback within the uptrend. The ideal scenario is a pullback to a key level, such as the AVWAP or the 5-day or 20-day moving average. This is the potential low-risk entry zone.
| Mistake | Shannon’s Fix | |---------|----------------| | Watch too many time frames (1-min, 5-min, 15-min, 30-min, 60-min, daily) | Stick to – one large, one medium, one small. | | Ignore the higher time frame after a loss | Always zoom out. A loss on the 5-min may be irrelevant to the daily. | | Enter because a lower time frame looks good, even though the daily is against them | Golden rule: Check the upstairs first . | | Use MTF analysis on low-liquidity stocks or crypto | MTF works best with liquid, institutionally traded assets. | Amazon
The HTF (Weekly or Monthly charts) dictates the macro trend. This is the "Tide." Shannon asserts that the trader must always know the direction of the Tide.
+--------------------------------------------------+ | STAGE 1: ACCUMULATION | | Price moves sideways. Baselines form. | +--------------------------------------------------+ | v +--------------------------------------------------+ | STAGE 2: MARKUP | | Higher highs and higher lows. Bullish trend. | +--------------------------------------------------+ | v +--------------------------------------------------+ | STAGE 3: DISTRIBUTION | | Price tops out. Heavy selling resistance. | +--------------------------------------------------+ | v +--------------------------------------------------+ | STAGE 4: MARKDOWN | | Lower highs and lower lows. Bearish trend. | +--------------------------------------------------+ 1. Trend Alignment
Another core tool is the 5-day moving average, which Shannon uses to gauge . In a healthy uptrend (Stage 2), price tends to stay above the 5-day MA, using it as dynamic support. Pullbacks to this moving average often present low-risk entry opportunities for swing traders. Conversely, in a downtrend (Stage 4), the 5-day MA acts as resistance. Essential Technical Indicators
Traders generally categorize charts into three distinct horizons based on their holding period:
The content is premium, it's to the point and will help make you a better trader; ChrisPerruna.com Technical Analysis Using Multiple Timeframes - Goodreads
The central thesis of Shannon’s work is that a single timeframe offers an incomplete and often deceptive view of market reality. A stock may appear to be trending upward on a five-minute chart while it is actually in the throes of a massive bear market on the weekly chart. By aligning the trends of longer timeframes with the entry signals of shorter timeframes, a trader creates a high-probability environment for success. This paper analyzes the technical and psychological components of Shannon’s methodology, illustrating why it remains a relevant and critical text for active traders.
What is your typical (scalping, day trading, swing trading, investing)?
: Is short-term momentum turning back in the direction of the macro trend? Essential Technical Indicators