This is the bottoming phase. Short-sellers realize profits, and cash is slowly enticed back into the market. Moving averages cross above and below each other, signaling indecision. Volume begins to slow, and the market's response to negative news eases.
In 2006, Shannon founded , a leading online technical analysis and trading education platform that has trained and mentored thousands of traders worldwide. He is widely recognized as one of the original pioneers of Anchored VWAP (Volume-Weighted Average Price) , a now-essential tool used by traders to identify key price levels and analyze market sentiment. This is the bottoming phase
Wait for a minor breakout or a clear reversal candle. Place your stop-loss order right below the immediate minor swing low to ensure a tight risk envelope. Volume begins to slow, and the market's response
The central thesis of Shannon's work is that no timeframe exists in a vacuum. Many novice traders focus solely on one chart, often the daily or a short intraday timeframe. This is akin to looking at a single puzzle piece and trying to understand the entire picture. Shannon argues that to make high-probability trades and manage risk effectively, one must understand how different timeframes interact. Wait for a minor breakout or a clear reversal candle
For those interested in learning more about technical analysis using multiple timeframes, here are the top 57 resources to get you started:
(26-35) 26. VWAP is "Institutional Truth" : Use it as a primary dynamic support/resistance level. 27. Use VWAP for Daily Context : It reveals who is in control on a given day. 28. Trade VWAP Pullbacks in Stage 2 : A common, high-probability setup. 29. Anchor VWAP to Key Events : Use AVWAP for objective levels from earnings, highs, or lows. 30. AVWAP Complements, Not Replaces : Its true power is in confluence with other tools. 31. AVWAP Defines "Who is Trapped" : It helps you see the position of other market participants. 32. Look for AVWAP Confluence : When AVWAP aligns with moving averages or prior S/R, it's a strong level. 33. Use AVWAP for Breakout Timing : It helps time entries and exits on structural breaks. 34. Don't Stack Oscillators : Avoid using multiple tools that all say the same thing; seek diverse confluence. 35. AVWAP is Not a Guarantee : Levels are areas of interest, not price guarantees.
– The momentum stalls and the stock moves sideways as institutional sellers unload shares.