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Stage 2: Accumulation (Uptrend) /\ / \ / \ Stage 3: Distribution (Top) / \_______ / \ _______/ \ Stage 4: Capitulation (Downtrend) Stage 1: Accumulation \ (Bottom / Consolidation) \______
Once the trend is established, the trader drops down to an intermediate time frame (e.g., the 60-minute or Hourly chart) to find the setup.
The information provided in this article is for educational and informational purposes only and should not be construed as financial or investment advice. Trading financial instruments involves significant risk of loss and is not suitable for all investors. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions.
Shannon typically monitors five different timeframes at once to get a comprehensive view: Identifies the long-term, secular trend. Stage 2: Accumulation (Uptrend) /\ / \ /
A stock gaps down on a negative earnings report, creating a large, untested gap. Anchor: Place an AVWAP anchored at the high of the day following the earnings gap. Action: For days or weeks after the gap, the AVWAP line will act as a powerful magnet for price. Wait for price to approach that AVWAP line from below. Entry: Enter short if price approaches the AVWAP and shows rejection, anticipating a move back down toward the lows. The AVWAP provides a well-defined risk level (just above it).
He advocates for a , which involves starting with the biggest picture and then filtering down to the finest detail for execution.
Shannon's methodology emphasizes that price action is the ultimate indicator of market truth and participant psychology. Top-Down Alignment Always conduct your own research and consult with
Look back at the daily chart and identify the most recent significant catalyst, such as a major low or an earnings gap. Draw an Anchored VWAP from that point. If the current price is trading just above this AVWAP line, it indicates strong institutional defense, giving you a high-probability zone to hunt for a long entry. Step 3: Zoom In to the 60-Minute Chart for Consolidation
In Shannon's methodology, VWAP serves as a key support and resistance level. When price is above the VWAP on a given timeframe, it suggests buyers are in control. For intraday traders, this is often the line in the sand for bullish momentum. If you look at Brian Shannon's work, you'll consistently see strategies focused on the "Perfect Combination of Price, Time, and Volume" using VWAP across multiple timeframes.
Some potential drawbacks include:
Building on this foundation, Shannon later wrote a second book, , which details how to anchor the VWAP from specific, meaningful starting points (like earnings gaps or major highs/lows) to gain an even more objective view of market control.
Disclaimer: Trading stocks involves a high risk of losing money. Always do your own research or consult a professional financial advisor.
Based on the book's content, clarity, and usefulness, I would rate "Technical Analysis Using Multiple Time Frames" by Brian Shannon 4.5 out of 5 stars. Anchor: Place an AVWAP anchored at the high
Shannon's primary rule is simple: 1. The Macro View (The Big Picture) Timeframes: Weekly or Daily charts.
The "Brian Shannon style" moves away from gambling and toward risk management. By using MTF analysis, a trader avoids the common pitfall of trying to catch a falling knife (buying a pullback that is actually a trend reversal) or shorting into a raging bull market.
