: Used to identify the major trend and primary support/resistance levels.
Shannon suggests using specific combinations based on your trading style:
One of the most celebrated frameworks in Technical Analysis Using Multiple Timeframes is Shannon's categorization of the four distinct stages that every stock, cryptocurrency, or commodity cycles through. Recognizing which stage an asset is in prevents traders from buying too late or shorting too early.
The core trading philosophy is that you should only take a trade when multiple timeframes align in the same direction. As one trading guide explains, "In multi-time frame analysis trading, you only take a trade when the big picture (macro), the day's structure (intraday), and the small order movements (micro) all agree" . : Used to identify the major trend and
You are aligning your trade with the dominant market force. How to Apply Shannon's Techniques
A revolutionary concept popularized by Shannon is anchoring the VWAP to significant market events. Instead of using a standard daily VWAP, you can anchor it to: The absolute low of a major market correction. An earnings report release day. A major gap-up or gap-down day.
On your intermediate chart (e.g., the 60-minute chart), map out the major support and resistance levels. Look for prior breakout points, psychological round numbers, and high-volume price nodes. Step 3: Wait for the Setup Pattern The core trading philosophy is that you should
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Stage 2: Accumulation (Uptrend) /\ / \ / \ _______/ \_______ Stage 3: Distribution (Top) Stage 1: \ Basement (Bottom) \ \_______ Stage 4: Capitulation (Downtrend) Stage 1: Accumulation (The Bottom)
Identifies the overall trend (e.g., Weekly chart). How to Apply Shannon's Techniques A revolutionary concept
The process always begins by determining the primary trend on the weekly or daily chart. A bullish setup on a short-term chart is not a valid trade if the larger trend is still bearish.
Since its original release, the book has been re-released in various formats. You can still find it as a , which is often considered the gold standard due to its high-quality color charts and print that make the graphics easier to study. There is also a paperback version (2023) , which is identical in content but uses a lower-cost, global printing format that may have black-and-white charts.