For bearish markets, reverse the logic:
This is how professionals build a "short book," waiting for the market to come to them rather than chasing a crash.
Shannon places heavy emphasis on volume as a confirmation tool, specifically regarding the "Quality of the Trend."
One of Brian Shannon’s greatest contributions to technical analysis is the integration of Volume Profile with Multiple Time Frame analysis. He argues that traditional RSI or MACD lag too much. Instead, he teaches traders to "link" price to volume nodes.
The High Volume Node (HVN): This is the "fair value" link. Price tends to revert to HVNs. The Low Volume Node (LVN): This is the "gap" link. Price moves quickly through these.
How to link them:
By linking the volume data across time frames, Shannon removes subjectivity. You are no longer guessing "is this support?"—you are seeing exactly where institutional traders placed their bets.
If you want to stop overtrading and start aligning with the trend, follow this rule:
Bullish alignment: Daily 20 MA sloping up + 60-min above VWAP + 15-min pullback to support. Bearish alignment: Daily 20 MA sloping down + 60-min below VWAP + 15-min rally to resistance.
Brian Shannon’s contribution to technical analysis lies in the systemization of disparate concepts. By combining Multiple Timeframe Analysis (to determine bias), Market Structure (to determine phase), and Anchored VWAP (to determine value), he provides a logical, three-dimensional view of the markets.
His work teaches that technical analysis is not about prediction, but about assessing probability. The use of AVWAP remains one of his most significant practical contributions, offering traders a clear mechanism to identify institutional positioning. by brian shannon technical analysis using multiple link
Sources Consulted: Technical Analysis Using Multiple Timeframes (Text), AlphaTrends.net archives, Public seminar transcripts on Volume Profile and AVWAP.
Brian Shannon’s approach to technical analysis, detailed in his acclaimed book Technical Analysis Using Multiple Timeframes
(2008), is a comprehensive framework for swing trading that focuses on aligning trends across different horizons to identify low-risk, high-probability entry points. The Multi-Timeframe Framework
The core philosophy is that every market move is part of a larger structural cycle. By using different "magnification levels," traders can see the interplay between big-picture trends and short-term price action.
Primary Trend (Weekly Chart): Identifies the overall market direction and major support/resistance levels that carry the most weight.
Intermediate Trend (Daily Chart): Used to plan the trade and confirm that the stock is in a "markup" stage (e.g., above rising 20 and 50-day moving averages).
Execution Trend (Intraday Charts): Uses 65-minute, 30-minute, or 5-minute charts to refine entry and exit points with precision.
65-Minute Chart: Favored by Shannon because it divides the 6.5-hour trading day into six equal periods, unlike the standard hourly chart. Key Concepts and Tools
In his seminal work, Technical Analysis Using Multiple Timeframes Brian Shannon
introduces a comprehensive framework that moves beyond simple chart patterns to focus on market structure, psychology, and risk management. The core of his methodology is the belief that price action is the "ultimate indicator," and by aligning trends across multiple time horizons, traders can significantly increase their probability of success while minimizing risk. 1. The Hierarchy of Timeframes For bearish markets, reverse the logic:
Shannon advocates for a top-down approach, typically examining three distinct layers to filter out "market noise" and gain clarity: Higher Timeframe (Weekly/Daily):
Used to identify the primary trend and major supply/demand zones. If the "big picture" is bearish, Shannon warns against taking long positions on shorter charts. Intermediate Timeframe (Daily/Hourly):
The "battlefield" where specific trade setups—like pullbacks or consolidations—are identified. Lower Timeframe (Intraday):
Used for precision timing. These granular charts help traders find exact entry and exit points to optimize the reward-to-risk ratio. 2. The Four Stages of Market Cycles
A foundational element of Shannon’s strategy is understanding the four stages every market moves through: Stage 1: Accumulation
– Sideways movement after a downtrend as "smart money" builds positions. Stage 2: Markup
– A sustained uptrend with higher highs and lows; the most profitable phase for long trades. Stage 3: Distribution
– Increased volatility as institutions begin selling to latecomers. Stage 4: Markdown
– A sustained downtrend where short positions are favoured. 3. Key Indicators: Anchored VWAP and the 5-Day MA Shannon is a pioneer in using the Anchored Volume Weighted Average Price (AVWAP)
, a tool that tracks the average price paid by market participants starting from a specific event, such as an earnings report or a major swing low. Brian Shannon | Technical Analysis and Chart Reviews 16 Feb 2024 — This is how professionals build a "short book,"
Title: The Trap of the Single Chart: Why You Need Multiple Links (Timeframes) to See the Real Trend
By: Brian Shannon
One of the biggest mistakes I see traders make daily is falling in love with a single timeframe. They pull up a 5-minute chart, see a beautiful breakout, and go long—only to get stopped out ten minutes later.
What happened?
They didn’t check the "links."
In Technical Analysis Using Multiple Timeframes, I hammer home one simple truth: A trend on a lower timeframe is just a noise bounce if the higher timeframe is in a bearish compression.
Let’s walk through a real scenario using the "Multiple Link" method.
| Metric | Single Timeframe (e.g., 15-min alone) | Multiple Timeframes (Shannon) | | :--- | :--- | :--- | | False Breakouts | High (no context) | Low (requires higher timeframe confirmation) | | Risk/Reward | Poor (unclear trend limits) | Optimized (targets are higher timeframe S/R) | | Psychological | Reactive, stressful | Proactive, systematic |
Shannon’s method inherently prevents "buying the top" and "selling the bottom" by forcing the trader to zoom out.