: Determine if the stock is in a healthy Stage 2 markup. Check if the 20-day and 50-day moving averages are sloping upward.
Establishes the macro trend, structural support/resistance levels, and overall market bias.
Mastering Technical Analysis Using Multiple Time Frames: Insights from Brian Shannon
The price breaks out of the accumulation zone. Higher highs and higher lows form. The asset is supported by rising short- and long-term moving averages. This is the primary stage where long traders should operate.
Let me know which direction works for you, and I’ll gladly write a detailed, original, and useful piece. : Determine if the stock is in a healthy Stage 2 markup
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This chart identifies the dominant market structure and major support or resistance levels. For swing traders, this is usually the daily or weekly chart.
Brian Shannon’s work reminds traders that successful technical analysis is not about predicting the future. Instead, it is about reacting to current market realities, managing risk dynamically, and aligning yourself with the path of least resistance.
Shannon emphasizes that the "Action Picture" should offer a high reward-to-risk ratio based on support/resistance levels found on the intermediate chart. This is the primary stage where long traders should operate
: A critical tool Shannon uses to determine the average price paid for a stock based on both volume and price.
The widely accepted hierarchy for applying MTF analysis is to:
The central theme of Shannon’s work is that no single timeframe provides a complete picture. Instead, he advocates for a "top-down" approach where the higher timeframe serves as the "tide" that guides the overall market direction.
Check the direction of the 20-day and 50-day Simple Moving Averages (SMA). If the 20-day SMA is above the 50-day SMA and both are sloping upward, the asset is in a Stage 2 Markup. Look for major horizontal support and resistance zones. such as short-term
Multiple time frame analysis involves analyzing a security's price chart across different time frames, such as short-term, medium-term, and long-term. This approach helps traders to identify trends and patterns that may not be visible on a single time frame. Shannon argues that using multiple time frames allows traders to gain a more complete understanding of market dynamics and to make more informed trading decisions.
Monitor the opening hours on a 10-minute chart. Wait for the stock to break above its short-term declining trendline or its intraday VWAP on increased volume. Step 4: Manage Risk and Set Stops
Sideways movement after a downtrend where institutional buyers begin building positions.