This is the most profitable stage for long-biased traders. A decisive breakout above Stage 1 resistance triggers the markup phase. The stock makes a consistent pattern of higher highs and higher lows, supported by a rising 20-day and 50-day moving average. Dips to moving averages during Stage 2 represent low-risk buying opportunities. Stage 3: The Distribution Phase
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Implementing Shannon’s framework requires a systematic, top-down approach. Follow this step-by-step checklist before taking any position:
Price makes a series of lower highs and lower lows.
To help tailor this trading framework to your specific style, tell me: This is the most profitable stage for long-biased traders
As a special offer, we are providing an exclusive free PDF download of "Technical Analysis Using Multiple Timeframes" by Brian Shannon. This PDF is a 14-chapter comprehensive guide to multiple timeframe analysis, and it's available for free download.
Mastering the Markets: An In-Depth Look at Brian Shannon’s "Technical Analysis Using Multiple Timeframes"
+--------------------------------------------------+ | 1. DAILY CHART: Identify Stage 2 Markup Phase | +--------------------------------------------------+ | v +--------------------------------------------------+ | 2. 60-MIN CHART: Locate Pullback to Support | +--------------------------------------------------+ | v +--------------------------------------------------+ | 3. 5-MIN CHART: Trigger Entry on Momentum Shift | +--------------------------------------------------+ Step 1: Establish the Macro Direction
Technical analysis using multiple timeframes involves analyzing a security's price chart across different timeframes to gain a more comprehensive understanding of its price action. This approach helps traders identify trends, patterns, and potential trading opportunities that may not be apparent on a single timeframe. Dips to moving averages during Stage 2 represent
After a prolonged downtrend, the asset stops making lower lows and begins moving sideways. Institutional buyers quietly accumulate shares without driving the price up significantly. The price fluctuates around a flat or flattening 200-day moving average. Trading during this phase requires extreme patience, as breakouts can take months to materialize. Stage 2: The Markup Phase
. You are looking for the primary trend. Is the stock making higher highs and higher lows? Shannon’s Rule:
Do not guess the bottom of a pullback. Wait for the 5-minute chart to break a short-term descending trendline or print a higher high. Place your stop-loss right beneath the most recent 5-minute swing low. 5. Manage Risk and Capital Preservation
Brian Shannon frequently reinforces that technical analysis is not about predicting the future; it is about managing risk based on probabilities. To help tailor this trading framework to your
For example, a trader analyzing a daily chart may notice a bullish trend, but by switching to a weekly chart, they may see that the trend is actually part of a larger bearish pattern. This information can help the trader make a more informed decision about their trade.
When these distinct timeframes align, different groups of market participants—from intraday scalpers to institutional portfolio managers—begin buying or selling simultaneously. This convergence exponentially increases the odds of a powerful, sustained move. The Four Stages of Market Cycles
Shannon’s trading philosophy is grounded in discipline, price action, and ignoring the "noise" of financial news, focusing strictly on the story told by the charts. His pedigree is so highly respected that in The Stocktwits Edge , it is noted that roughly .