Brian Shannon Market Structure + Reversal Engine

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Shannon Market Structure & Reversal Engine

This indicator is based on the concepts from Brian Shannon's book, *Technical Analysis Using Multiple Timeframes*. It focuses on **Market Structure**, **Trend Alignment**, and **Volume Weighted Average Price (VWAP)** to identify low-risk, high-probability trade setups. It automates the identification of the 4 Market Stages and provides actionable entry/exit signals based on momentum shifts and institutional value levels.

**Key Visuals:**

1. **Trend Ribbon:**
* **Green:** Stage 2 Markup (Bullish). The 10, 20, and 50 SMAs are aligned upward. Look for LONGS.
* **Red:** Stage 4 Decline (Bearish). The 10, 20, and 50 SMAs are aligned downward. Look for SHORTS.
* **Gray:** Stage 1 or 3 (Neutral). Moving averages are tangled. Avoid trading or reduce size.
2. **VWAP (Orange Line):** The "Institutional Truth." Used as a dynamic support/resistance level.
3. **Signals:**
* **"L" (Green):** Long Entry. Triggered when price reclaims the VWAP while the intermediate trend is bullish.
* **"S" (Red):** Short Entry. Triggered when price loses the VWAP while the intermediate trend is bearish.
* **"Rev" (X):** Reversal Warning. Triggered when the Short-Term trend (10 SMA) crosses the Intermediate-Term trend (20 SMA), signaling a loss of momentum.

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### **Instructions: How to Trade This**

**1. The Setup (Context)**

* **Check the Dashboard:** Look at the "Daily Trend" box in the top right. If it says "Stage 2 (Bull)," you are primarily looking for **Long** trades. Do not fight the Daily trend.
* **Check the Ribbon:** On your trading timeframe (e.g., 5m, 15m, 30m), wait for the ribbon to turn **Green**.

**2. The Entry (Timing)**

* **Wait for the "L":** Do not buy just because the ribbon is green. Wait for price to pull back towards the Orange VWAP line and then cross back above it.
* **The Signal:** When the **"L"** label appears, it means price has reclaimed value and momentum is aligned. This is your trigger.

**3. The Exit / Defense (Risk Management)**

* **Stop Loss:** Place your stop below the most recent swing low or below the VWAP.
* **Reversal Warning:** If you see an **Orange "Rev" X** appear at the top of a candle, the fast momentum is breaking down. This is not a signal to short, but a signal to **take profits** or tighten your stop loss immediately.

**4. The Rules (Brian Shannon's Philosophy)**

* **Innocent Until Proven Guilty:** If the ribbon is Green and rising, stay with the trend.
* **Guilty Until Proven Innocent:** If the ribbon is Red and falling, stay short or in cash.
* **Don't Predict:** Do not buy at the absolute bottom. Wait for the ribbon to turn and the VWAP to be reclaimed. Better to buy higher with confirmation than lower with hope.

Timeframe, Rating, Adjustments Needed
Intraday (1m - 4h), Perfect, "Use exactly as is. This is the ""sweet spot"" for this script."

Daily (1D),Good, "Turn OFF ""Show Session VWAP"" in settings. Use the Ribbon for Stage Identification."

Weekly/Monthly, Okay, "Turn OFF VWAP. Ignore the ""L/S"" entry signals (as they rely on VWAP). Use strictly for the Ribbon color (Green = Long Term Bull Market)."

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Notas de Lançamento

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Indicator Name: Shannon Market Structure + Reversal Engine [Complete]
1. Core Concept
This toolkit automates the swing trading methodology of Brian Shannon (AlphaTrends). It focuses on Market Structure (4 Stages), Trend Alignment (Multiple Timeframes), and Volume Weighted Average Price (VWAP) to identify high-probability trades where institutions are active.
2. Visual Legend (What you are seeing)
• The Ribbon (Trend):
o Green: Stage 2 (Markup). 10 SMA > 20 SMA > 50 SMA. Action: Look for Longs.
o Red: Stage 4 (Decline). 10 SMA < 20 SMA < 50 SMA. Action: Look for Shorts.
o Gray: Stage 1 or 3 (Neutral). Moving averages are tangled. Action: Cash / Stand aside.
• The Lines (Value):
o Orange Line: Session VWAP. The intraday "line in the sand." Bulls live above, Bears live below.
o White Dotted Line: Event Anchor (AVWAP). Automatically finds the highest volume candle of the day (e.g., Earnings gap or Opening drive) and anchors a VWAP to it. This is the "Institutional Support" level.
• The Signals (Timing):
o "L" (Green Label): Long Entry. Price reclaimed VWAP while trend is Bullish.
o "S" (Red Label): Short Entry. Price lost VWAP while trend is Bearish.
o "Rev" (X Mark): Momentum Shift.
 Orange X (Top): Fast momentum is breaking down (10 crossed below 20). Take profits/Tighten stops.
 Blue X (Bottom): Selling pressure is exhausting (10 crossed above 20).
o "EX" (Pink Cross): Stop Loss / Exit. Triggered based on your specific settings (Default: Close below 10 SMA).
• The Dashboard (Top Right):
o Displays the Daily Trend (Higher Timeframe). Rule: Do not day trade against the Daily Trend.
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3. Trading Instructions
The Setup (Context)
1. Check the Dashboard: Is the Daily Trend aligned with your idea? (e.g., If Dashboard says "Bear", ignore Long signals).
2. Check the Ribbon: Is the ribbon expanding and colored (Green/Red)? Avoid Gray ribbons.
The Entry (Execution)
1. Wait for the Pullback: In a Green Ribbon trend, wait for price to dip toward the Orange VWAP or White AVWAP.
2. The Trigger: Enter when the "L" (Long) or "S" (Short) signal appears. This confirms momentum has returned in the direction of the trend.
The Exit (Defense)
1. Profit Taking: If an Orange "Rev" X appears, momentum is stalling. Sell 1/2 or 2/3 of position.
2. Stop Loss:
o Aggressive: Exit immediately if the Pink "EX" signal appears.
o Structural: Place hard stop below the most recent White AVWAP dots.
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4. Settings Guide
• Show Session VWAP: Toggle the Orange line.
• Show Event AVWAP: Toggle the White "High Volume" anchor line.
• Exit Strategy (Dropdown):
o Momentum (10 SMA): Best for fast day trades/options (Tightest).
o Structural (20 SMA): Best for multi-day swing trades (Looser).
o VWAP Fail: Best for "Reclaim" plays. Exits if price fails to hold VWAP.
• Time Filters: Defaults to 09:30-16:00 to avoid pre-market noise.
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