Shannon typically utilizes the 10, 20, 50, and 200-period moving averages. He uses these not just as support/resistance, but as a visual guide for the "slope" of the trend. A rising 20-day moving average indicates a healthy short-term trend. Risk Management and Psychology
This identifies the "Big Picture." Is the stock in a Stage 2 Markup or a Stage 4 Decline? Shannon typically utilizes the 10, 20, 50, and
He redefines these concepts not as fixed lines, but as zones of supply and demand that shift based on the timeframe being viewed. Understanding Multiple Timeframe Analysis (MTFA) Risk Management and Psychology This identifies the "Big
While not the main focus of the original 2008 edition, Shannon’s updated teachings heavily feature the Anchored Volume Weighted Average Price. This tool allows traders to see the average price paid since a specific event, such as an earnings report or a major swing low. Moving Averages This tool allows traders to see the average
MTFA is the process of viewing the same asset under different time compressions. Shannon’s book outlines a specific hierarchy for this:
This is used strictly for timing entries and setting tight stop-losses.
The primary goal is to trade in the direction of the higher timeframe trend while using lower timeframes to pinpoint low-risk entry points.