This comprehensive guide explores the core concepts of Shannon's multiple timeframe analysis, details the market cycles you must know, and explains how to structure your charts for maximum profitability. The Core Philosophy of Multiple Timeframe Analysis
Typically the daily or weekly chart. This establishes the macro trend and historical support or resistance.
Look for a healthy, lower-volume correction on the intermediate chart. This comprehensive guide explores the core concepts of
Volatility is low and price remains below key moving averages. A sustained uptrend with higher highs and higher lows. This is the most profitable phase for long positions.
If you are looking to deepen your understanding of market structure and trade execution, I can assist you further. Would you like to explore of the four market stages, break down how to calculate Anchored VWAP , or learn how to scan for Stage 2 markup setups ? Share public link Look for a healthy, lower-volume correction on the
Brian Shannon’s core philosophy relies on a simple truth: . A stock can simultaneously look bearish on a 5-minute chart, bullish on a daily chart, and neutral on a weekly chart.
The upward momentum stalls. Buyers and sellers reach equilibrium, leading to a volatile, sideways trading range. This is the most profitable phase for long positions
: Disinterest and exhaustion from sellers. Smart money begins quietly building positions.
+-------------------------------------------------------+ | STEP 1: Identify Long-Term Trend (Weekly/Daily) | | - Look for Phase 2 Markup (Bullish) | +-------------------------------------------------------+ | v +-------------------------------------------------------+ | STEP 2: Analyze Intermediate Trend (65-Minute) | | - Wait for a pullback to a key Moving Average | +-------------------------------------------------------+ | v +-------------------------------------------------------+ | STEP 3: Execute and Manage Risk (10/5-Minute) | | - Buy the breakout of the short-term declining trend | | - Set stop-loss just below the recent swing low | +-------------------------------------------------------+ Step 1: Identify the Long-Term Trend
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.
- Action: Look at the weekly chart. - Question: Are the moving averages sloping up (Markup) or down (Decline)? Step 2: Identify the Value Zone - Action: Drop to the daily chart. Is the stock pulling back to the rising moving average? - Rule: Do not buy if the stock is extended far away from the moving average. Step 3: Use the Lower Timeframe for Precision - Action: Look at a 15-minute or 60-minute chart. - Signal: Look for a reversal pattern (a bullish engulfing candle or a break of a small falling trendline) inside the value zone identified in Step 2. Step 4: Manage the Trade - Stop Loss: Place the stop just below the recent swing low on the lower timeframe or below the Anchored VWAP. - Profit Target: Look towards the next resistance level on the higher timeframe.