Look for a clear, established trend (e.g., price above a rising 200-day Moving Average). 2. The Intermediate Timeframe (ITF): Setting the Scene
Large institutional investors frequently use VWAP as a benchmark for trade execution. When price is above VWAP, buyers are in control—the average participant is profitable. When price is below VWAP, sellers are in control—the average participant is underwater.
On the morning of the trade, monitor the 5-minute chart. Look for a catalyst, such as: A break above an intraday opening range. A break above a declining short-term trendline.
The trend on the higher timeframe dictates the direction of the trade, while the lower timeframe is used to identify the optimal entry point. Higher Timeframe (HTF): Sets the context (The Trend). technical analysis using multiple timeframes brian shannon
All three moving averages are aligned downward. Price is making lower highs and lower lows. Look for short trades or stay entirely in cash. Do not attempt to catch falling knives.
Tools and techniques emphasized
In Shannon’s trading system, VWAP serves as the on intraday timeframes. The rule is straightforward: you don’t buy until price reclaims VWAP while the intermediate trend is bullish. You don’t short until price loses VWAP while the intermediate trend is bearish. Look for a clear, established trend (e
A close below an anchored VWAP on the timeframe it was anchored to signals a potential invalidation of that thesis.
AI responses may include mistakes. For financial advice, consult a professional. Learn more
By mastering multiple timeframe analysis, you eliminate the noise of the market. You stop chasing random moves and start trading with the wind at your back, aligning the micro entry triggers of the present with the macro trends of the market tape. When price is above VWAP, buyers are in
Volatility increases significantly as buyers try to push the price higher but face heavy institutional selling.
The "Magnifying Glass" of the shorter timeframe helps you see the cracks in the pavement, but the "Map" of the higher timeframe tells you where the road is actually going. Align the two, and you stop gambling and start trading.
Low or erratic. Institutional buyers are quietly building positions without driving the price up.