Brian Shannon 5-Day MA Background

31 maj

Brian Shannon 5-Day Moving Average with Dynamic Background Fill

OVERVIEW
This indicator implements Brian Shannon's renowned 5-Day Moving Average methodology from his acclaimed work "Technical Analysis Using Multiple Timeframes." The indicator provides instant visual clarity on short-term trend direction and momentum, making it an essential tool for swing traders and active investors.

KEY FEATURES
• True 5-Day Moving Average: Dynamically calculates the correct period across all timeframes (1min, 5min, 15min, 1H, etc.)
• Visual Price-to-MA Relationship: Color-coded fill between price and the moving average
- Green Fill: Price is above the 5-day MA (bullish short-term momentum)
- Red Fill: Price is below the 5-day MA (bearish short-term momentum)
• Multi-Timeframe Compatible: Works seamlessly on any chart timeframe while maintaining the true 5-day calculation

BRIAN SHANNON'S STRATEGIC APPLICATION

Primary Uses:
1. Trend Identification: Quickly identify short-term momentum shifts
2. Dynamic Support/Resistance: The 5-day MA acts as a moving support level in uptrends and resistance in downtrends
3. Entry Signal Confirmation: Look for pullbacks to the 5-day MA as potential entry points in trending stocks
4. Multi-Timeframe Analysis: Essential component of Shannon's multiple timeframe approach

Perfect Combination with:
• AVWAP (Anchored Volume Weighted Average Price): Use together to identify high-probability setups where price is above both the 5-day MA and AVWAP
• Longer-term Moving Averages: Combine with 20-day and 50-day MAs for complete trend analysis
• Volume Analysis: Confirm 5-day MA signals with volume patterns

TRADING APPLICATIONS

For Swing Traders:
• Bullish Setup: Price above 5-day MA + above AVWAP + above longer-term MAs = Strong uptrend
• Bearish Setup: Price below 5-day MA + below AVWAP + below longer-term MAs = Strong downtrend
• Entry Timing: Use pullbacks to the 5-day MA as entry opportunities in the direction of the primary trend

For Day Traders:
• Quick visual confirmation of intraday momentum
• Dynamic support/resistance levels for scalping opportunities
• Clear trend bias for directional trades

WHY THIS INDICATOR WORKS
Brian Shannon's approach emphasizes that the 5-day moving average represents the short-term sentiment of market participants. When price is consistently above this level, it indicates buyers are in control of short-term price action. Conversely, when price falls below, it suggests selling pressure is dominating.

The visual fill makes it immediately obvious:
• How far price is from the 5-day MA
• The strength of the current short-term trend
• Potential areas where price might find support or resistance

BEST PRACTICES
1. Never use in isolation - Always combine with longer timeframe analysis
2. Volume confirmation - Look for volume expansion on moves away from the 5-day MA
3. Multiple timeframe approach - Check higher timeframes for overall trend direction
4. Combine with AVWAP - Most powerful when both indicators align

INSTALLATION NOTES
This indicator automatically adjusts for any timeframe, ensuring you always get a true 5-trading-day moving average regardless of whether you're viewing 1-minute or hourly charts.

Based on the technical analysis methodology of Brian Shannon, author of "Technical Analysis Using Multiple Timeframes"

1 cze

Informacje o Wersji

Updated that it will be seamless in the daily chart as well

3 cze

Informacje o Wersji

Update:
1. Added a label to indicate how far the price from the 5 day moving average

3 cze

Informacje o Wersji

Update:
1. Rename the title