Original subtitles

Hello everyone, today is February 11th and this is our session number 6 of the

Wyckoff Trading Course.

Today we're going to jump into the volume and price analysis.

This is something that I've been waiting for for quite some time. Unfortunately,

we can't do this right away. We need to be familiar with the

price structural analysis first before we start understanding how volume

influences the price.

So this is where we are.

And today it's kind of like this transitional class. We're going to

homework, but then we're going to go into the new material.

Some of the notes. So usually I don't read a lot on the comments, but I want

comment on your comments.

So if you had a chance to read this, this is great.

Okay, so what's important here from the comments?

Events phase analysis club with the wave analysis logic, you discussed

indirectly, helped me identify a trade, few Wyckoff trading ranges and 530 one

-day weekly timeframes. I have started seeing the price chart differently now,

and that's what I wanted to get. Okay, this right here.

I would certainly consider this as a major breakthrough.

So this is exactly the time and this is exactly the message that I should be

hearing now from you.

Because it's been already five sessions that we've been together. This is the

sixth session.

So this logic, the Wyckoff logic, or the logic that I teach you guys, should be

seen on the charts.

You should be seeing trading ranges.

You should be seeing changes of character. You should be seeing extremes

trading range.

For instance, you know, like spring, upthrust, those type of extremes.

You should be able to label those extremes, label the phases with the

ranges. And therefore, when you look at the market, when you look at the stock,

you should have a different type of way of analyzing this. And this should come

now. So it usually happens in the second months.

Thanks for overloading us. I need to know this stuff.

It seems to be coming together more each week. Yes, and that's how it's built.

It's built on layers, right? So today we're going to go into a new big layer,

but still we're going to be a little...

building the new layers based on what we've learned so far.

Still working on volume supply demand tests, Tron weak hands, and

this is something that is going to come more. So we're definitely going to go

into this material more.

Okay, what else?

Okay, so yeah, that's great.

Okay, well, everything else is kind of thank yous. And thank you for thank

Yeah, I really appreciate this.

And thank you for the comments.

So I think that we're in a good place. And actually, I was really impressed

the homeworks.

I think we worked really hard on labeling.

We worked really hard with all of the homeworks that we've done, with all of

adjustments throughout the reviews.

And now I see you guys are so good with this. I was really impressed with this

week's homework. So thank you for submitting your homework.

All right, let's jump into our session for today. So

today, first we're going to review Apple homework. So this review will be quick.

I would rather spend more time on the new material and especially the group

exercise that we're going to have here. This group exercise will take us

probably five, six sessions, hopefully five.

So this is going to be a very, very big piece of knowledge that I'm going to

give you guys for this exercise.

We're going to start on the volume today with the volume and spread analysis.

This is an essential basic that we have to have.

in order for us to understand the interpretation of the relationship

price and volume.

I'm going to give you two homeworks.

Homework six, actually, why is it one? Six and homework seven.

So homework six is going to be an easy homework. It's going to be just one

type of homework.

And it's going to be around the volume and spread concepts.

Then we're going to talk.

really quickly about the loss of the supply and demand, effort versus result.

I'm going to give you my take on those.

And then we're going to start that big group exercise.

And hopefully we're just going to kind of like go fast through this.

Next session, session number seven.

We're going to continue with our group exercise. We're going to talk about the

volume phase analysis.

That is what are the characteristics of supply and demand in different phases

of accumulation and the distribution.

And then, again, the homework is going to be a group exercise.

By the way, speaking about the homework of the group exercise, one of the main

assignments here is going to be to watch again

and make notes.

So I want to reiterate this from the beginning of this exercise.

This exercise will give you a lot of knowledge.

And this knowledge will be given to you also on the slides as well. But

the most effective way to gain value from this knowledge is to actually watch

the exercise again.

make notes, and think about those.

This has been a big educational tool

in this course, making notes about this exercise.

And from cycle to cycle to cycle, students are emailing me

and saying that when they watch the video again,

They are catching so many things that they did not catch during the class.

So I'm going to reiterate this many times throughout the next five

sessions.

So you'll hear about this again.

All right, let's review the homework.

The homework was on Apple.

And here, together with the homework, I'm always trying to give you some kind

concepts.

Today's concept for the homework review is going to be about institutional value

zone.

And I forgot who exactly, but one student was asking me in the email, you

when are we going to be covering the value zone definition? And that's kind

like what's so timely as a question, because this exercise, in a way, is kind

devoted to...

thinking about the origination of this concept, institutional value zone.

Let's look at the trading range first and the labeling on its own.

So some of you have figured out that this whole

formation is a trading range.

And then some of you decided to maybe have a different

interpretation.

and have a lot of small trading ranges identified. So, for instance, somebody

would be looking into this area, this area, this area, this area, this area,

this area, this area.

Both approaches are correct.

Yes, we do see a consolidation if we would think about the climactic action,

automatic reaction, secondary test that define phase A and the change of

character.

relative to the uptrend that we have had in 85 to 87,

if we would have bought the stock and then in 2004 have sold the

stock, we would not gain anything.

Meanwhile, there were quite a lot of deviations around this mean, right? And

especially on the rally in 98, 99.

So let's just kind of think about this a little bit.

Is it possible that maybe the trading range was somewhere here?

And I saw this in one of the homeworks. And I thought that was a very

interesting idea.

And actually, I kind of like this just because I see how the texture here

was different. It was more of the reaccumulation texture where we have a

-type action. The price comes down and then comes back.

really quickly in a very aggressive rally.

And here we would be thinking it's a sign of strength.

I mean, look how everything looks so good.

There's not a lot of supply.

There's demand that's coming up, increasing. And then the rally has the

characteristics of a sign of strength rally.

It's an increasing spread, increasing demand signature, and the price commits

buff.

But it only commits above temporarily.

So this pattern fails after the price comes back and gaps down.

Let me show you a little bit better.

So here is this gap right here.

So the first failure is to commit not just by one close. The second failure is

the return to the trading range. The third failure...

is the gap to the downside, and the fourth happens on the increased supply

signature. This is not how the backing up action would behave.

So therefore, this pattern fails, a pattern of what we thought a

So then we're going into another pattern here, right, or another texture. So

this looks like a distributional formation.

And it looks like a TP formation right here where we have urgency to sell on

gap down in activity throughout and then a pickup in the institutional

capitulation on the way down.

So it's right here where institutional trend followers are going to give up

their positions.

And that's going to produce this quick move to the downside. So everybody's out

of the position.

And then because of that, Because the CEO is out.

And at the same time, you know, we are thinking the CEO is

out.

ITFs are out.

Professionals are out.

And public also is going to experience some pain here with

getting into the position and then getting out of the position, you know,

the... at the price of this triangular formation and then on the way down.

So it just does not, this type of action and

later capitulation does not produce a lot of demand on the way up. And

that's why this rally fails.

So exhaustion of both sellers and buyers at the same time.

And then we're going into the oversold condition. I will come back to this and

will explain to you how did this come about.

This is a little bit more volatile just because Steve Jobs is coming back to

company. So that produced some institutional buying. We could see out

deeply oversold condition, we are...

rallying really fast.

And then giving it all up and then rallying even better.

So a news -driven volatility at the end of the down move.

So what I'm saying is that I actually kind of like this labeling too.

And the reason why is because we have a very clear commitment to the upside

right here. We have a very clear commitment to the upside even without

the downsloping range.

Even with the bigger range, we still have a very, very pronounced

commitment to the upside.

And then something interesting happens.

And those are characteristics of the major sign of strength.

Something interesting happens.

We would be expecting a backing up action into this area. Something like

So what happens next?

Well, 2000...

and the market top.

That's what happens.

And then after that, we have the market in the downtrend.

And the market, as I mentioned before, has so much gravity.

It is so, you know, the sentiment of the overall market is

going to dominate sometimes the sentiment even of the leadership stocks.

and the leadership stocks are going to show some kind of weakness.

Well, 2000 market was a really urgent market to

distribute the stocks, and we had a couple of big moves to the downside,

big legs to the downside, very volatile.

So that type of price action is going to create a lot of following.

So therefore, a lot of the leadership stocks are also going to go down.

not going to go down as much as the market, but they're still going to have

pronounced move to the downside.

So sometimes in phase D, we would observe this phenomenon.

This is the phenomenon of a shakeout action.

And usually when we talk about the shakeout, I want you to think about a

scenario.

long -term bullish scenario with the short -term oversold

weakness, which is effectively a shakeout by itself.

And that's what the shakeout is all about.

And I believe that the current market action happened in the same way. It was

shakeout, short -term weakness, the price action.

in the long -term consolidation pattern, which still suggests that the U

.S., even at this level of growth, is going to produce a better result than

anything else in the world right now.

And therefore, it acts also as a flight to safety, flight to quality, flight to

defense.

Even though the short -term picture, I think going into summer and into early

fall,

we're probably going to have a reaction.

We're going to consolidate for quite some time.

But then after that, going into 2020, if that growth is still going to be there,

even at the current levels, we might have a continuation of a bull run.

I've talked about this at the Market Watchers Live this last Wednesday. If

have not caught that session, go to StockChartsTV

YouTube channel.

And then the presentation is called 10 Questions About Current

Market Structure.

And my segment there was really small, probably like 20, 30 minutes. So you can

watch that.

So this is just a phenomenon in phase D that happens sometimes with

the stocks that are showing a lot of strength on the major sign of strength.

And then the market happens, the market weakness happens, and the stock is being

influenced. Just because the stock has had a lot of supply, it needs some time

to retest it.

So therefore, that concludes that major last point of support area.

So this is a very, very huge trading range. And somebody might be thinking,

well, is it really possible from 1987 to 2004 that this is the trading range?

How could we even confirm that this was the trading range?

Okay, well, one of the ways to confirm this...

is to extract the PNF target from the

trading range.

So here I'm using a very old software, which was called Bullseye.

And this software allowed to create this type of long -term charts.

I'm not sure if you could do this in stock charts.

I would be very curious to know.

So here we are looking at the original trading range. Here is this major sign

strength. Here is this shakeout in 2000 that leads to the low LPF, low point of

support. Here is our phase C with the spring.

And what we would do with the PNF count, we would count from the right

over to the whole area of where the...

Trading range has started in phase A.

And that gave us a target of 220.

And we hit 200 and a half, I believe.

Well, I would say that's very close.

Why is this close?

20 bucks? Well, because when we are making a decision to enter this

are in the...

a six to nine dollar range so i would say that extreme that is very close um

for those of you who are curious this area right here produced a confirming

account so that was also very interesting and this whole move to

200 suggests that this whole trading range has been an accumulation so

now

and it has been kind of like a wholesome trading range, right? So if this is the

whole trading range, then the biggest rally is going to be a major sign of

strength. So we're confirming that.

Then the next higher low is going to be a last point of support.

And then whatever comes before as the lowest point is going to be phase C. And

then before that, you know, however you label this, everything is going to be

fine.

Well, the bias itself, obviously,

has been given to us throughout the whole structure.

That's why I refer to the Wyckoff analysis as a rolling over analysis.

You kind of could see how the analysis develops, how the story is being

created. And the story is really being created once Steve Jobs is coming back

Apple. This is where the volume starts to pick up a lot.

And then look at the overall volume signature on the major sign of strength.

There are buyers all the way up to this area right here. It's only in this area

where the demand started to go down.

But diminishing demand does not mean that there are no buyers.

Diminishing demand suggests that there are fewer buyers.

But even the fewer buyers could push the price so significantly higher than the

point of the resistance.

from phases A and B.

So therefore, we're seeing that all the way on this rally, there is a lot of

buying that's happening.

And then obviously, the market happens and there is a lot of capitulation

by institutional trend followers.

They capitulate at this point. At the same time, The CO is

seeing liquidity and value, and the CO

picks it up on the way down.

And then the stock shows a lot of relative strength until this point where

demand becomes a little bit urgent, it increases, and that pushes the price to

the new trajectory of a new uptrend.

Now let's talk about the institutional value zone.

So how would we define where institutions are interested in this

stock? Well, we need to find the places where the price stops on

what we could interpret as institutional buy -in

because it's the stop in action and subsequent

demand that is being shown to us in that stop in action would produce a

suggestion that some big interests are buying at this point of time.

As well as any type of rallies off the lows that would have a lot of volume

characteristics.

So this is definitely where institutions are establishing their positions.

Something like this could be observed in the behaviors not of just the CEO, by

itself, but also by institutional trend followers.

They will be buying on the way up.

Their buying will create the waves, the swings that we see

on the chart.

So here are the first time where the price fails and is being supported of

two bars.

There is some increase in the volume signature.

So whoever was buying here on the way up, was definitely giving up.

But somebody was also buying at the same time.

So with that, one of the highest volume signatures, we would be thinking that

this is where the CEO might be coming in and buying.

And that CEO, this type of institution, eventually will be wrong about this

position. I was making an argument with somebody this last week.

about the CEO not necessarily being the CEO on all of the

trades.

Can you imagine that institutions that we think that they are CEO, like Warren

Buffett's, that they make mistakes as well?

I mean, like if you study Warren Buffett's trading history, you will see

has made quite a few mistakes.

So we can't really say that Warren Buffett, was the CEO on all of his

He definitely was the CEO in a lot of the trades, and in some, he was wrong,

he was weak hands.

And he provided liquidity, and he capitulated on the positions. One of the

latest positions that I could think of where he capitulated was IBM

a couple of years ago, I believe.

So we've talked about this in classes.

But somebody is buying here as well as somebody is buying right here on the way

down because they're seeing with all of this capitulation that some value comes

into this area.

So and then throughout this whole range, this is where we're going to see,

again, some elements of buying.

Whenever the price goes below this level, we would consider this an

condition. And therefore, with the oversold condition, there is some value

institutions. And they would come in and they would start buying. So for

instance, like a bar like this, or a bar like this, and so on and so forth.

And we would be seeing these bars with the increased demand signature.

And again, it's going to take some time for institutions that...

we perceive as the CEO type of institutions try to stop the price from

lower down and yet failing every time. There is failure number one.

There is failure number two.

Full starts.

So here is where I don't want you to think so linearly.

When we see a big volume signature, we know that huge institutions are coming

and they are buying.

And we're definitely thinking that this is the CEO type

of signature.

But we know that even those big type of institutions could fail.

And they could produce a loss instead of a win.

So those will become not the COO, but we can't.

And we just need to technically identify the areas where finally the bind by the

institutional hands is going to prevail into the uptrend.

But we could identify the zone. Here is the zone. And where it comes to the

oversold condition, we would be expecting that there's going to be some

push to the upside.

And then when it...

over is is oversold again with the new support area right here this is again

where we're going to see a quick um rise to the upside that would suggest

that either supply is exhausted or there are some buyers and they've seen this

as a value and therefore they are biased on this bar then again as the price

comes down again we're seeing this spring type action So, oversold

a true value zone will always produce this type of definition of

how the price reacts in the B bottom, quick recovery, quick momentum type

of buying, just because they're seeing value right there.

All right, and then the next value.

zone spot for us is somewhere here, where we see that a lot of institutional

followers, trend followers, have given up.

So the CEO is definitely seeing this as an opportunity to buy, and it's buying

exactly in this zone right here.

So we finally see that instead of going lower and creating lower lows, the value

zone is being respected. So by itself, it's a sign of strength.

And then we're seeing the confirmation by the volume that there is an

institutional value buying on the short -term liquidity and long -term value.

They're thinking that this is a short -term event with the long -term

to the upside.

All right, let's go to the next chart.

Okay, actually a couple of questions here.

thinking about this as a long -term trading range and taking your phase C

labeling it a shakeout instead of a spring.

Is this correct or is this wrong? I think that if you will be referring to

support area that was created by the automatic reaction, then the extent with

which the price came down into phase C could be interpreted as a shakeout.

Having said this, this is not the first or the last point of support that has

been developed by this trading range.

And therefore, all of this spring and shakeout type of action will only be

to us below any of the lowest support that we could see.

So where are the levels of the support?

First level of the support.

belongs to the automatic reaction.

The second one belongs to the secondary test with a sign of weakness or a

localized spring.

So we're already thinking that if price goes down below this level, this is our

oversold condition and not necessarily this one, the upper one.

So with this logic, we're thinking, again, here is another one, here is

one.

it gradually goes down. The shakeout action, we really would like to see more

this quality, where there is no laborious move to the downside.

This is not how shakeout happens, and this is exactly what's happening in this

area, but more of kind of like a catapult wall down, where

everything goes down.

That's a shakeout type of action.

So just the texture, the character of this is not of the shakeout type of

quality.

So therefore, this is just a trading range that we will label as a strain and

test.

Next question.

What is this software?

It's already discontinued, so it doesn't really matter.

Isn't it a down move on increase?

volume bearish sign right after 1991 okay so

1991 uh down move on increased volume a bearish sign this one right

here yeah of course but you're thinking you're thinking more um

um that's kind of like a public here because yes it is a bearish sign

but For some of the institutions, this is going to be a certain value,

and they're going to be buyers at this point.

It doesn't mean that the price will go up from here.

No, but we're just recognizing that this is the first time when they attempted

to buy.

So we want to see how the buying is going to happen at this level.

And look what's happening next, right? So, for instance, right here, this was a

very important spot.

where the buying has happened again at the same point.

So that reconfirms that institutions are willing and seeing the value here and

they're willing to buy.

All right.

Can we label automatic reaction as a shakeout?

Yeah, you can definitely do this because, again, it doesn't influence.

your trade decision right here on the screen so this could be a shakeout

automatic reaction secondary test and here's your phase a anyway so it

doesn't really matter that much all right let's go to the next one so this

probably uh the hardest one so i've seen a lot of the

Different interpretations, and I thought that, you know, let me go through

different scenarios here. Everything else was kind of okay, and that was so

surprising. So I thought that the difficulty was more in the nuances, more

kind of like some details, some variations.

Everything else, really, you guys just did phenomenal work with the homework.

All right, so we've talked about, an institutional value zone right so again

would we define it we want to find the first time when they are actually buying

right so we don't see a lot of buying on the way down so the volume signature is

not increasing here on the climactic run and that's fine sometimes that happens

uh it's just again a variation which is different from what we've seen let's say

somewhere here um in this case the first buying happens and then No buying

again. This bar right here reflects supply and suggests a move to

the downside after a local upthrust.

So we're really only seeing a buying around this zone right here. So if we

extend it, think about what happens next.

On the way down here, we see the volume signature increase.

This increase in volume spike suggests that, well, first of all, supply is

increasing a lot.

But there is also increase of the demand.

And this increase of the demand we could see from the daily spread.

The daily spread is actually diminishing relative to what we've seen before,

right? So this gap down does not reflect the volume, overnight volume. This is

only the daily volume.

So on the dimension daily spread with the volume spike like this,

that suggests the presence of the demand, and not only the presence, but

increase of the demand.

An increase of the demand suggests that absorption is underway.

Plus, think about the character of this demand. There is so much demand on this

bar, hidden from us.

that it observes the supply, and we start thinking if the levels of demand

so high, this is probably an institutional demand.

Where did we see demand before in this area?

Somewhere here.

So it makes a lot of sense that they are buying in the same zone.

Because what's happening with institutions is that they basically

value zone for them, which...

calling it exactly like this, institutional value zone, and they are

their traders, buy me everything between 50 and 70.

And especially I'm interested if the price goes below 50 because as an

institutional trader, if you could get a position at the lower

prices, that's even better.

And what happens when the price goes...

below the value zone, it usually produces a very quick reaction from

institutional traders because they see value and the price recovers quickly in

the spring type of manner.

So this spring is actually, you know, this kind of like the analogy. Okay, I'm

drawing this incorrectly totally, but it's a spring, right?

So it expands and contracts. You could...

You could push it together and then allow it to expand, and it will do so

quickly.

The same happens in this spot.

It really is a springing out of this short

-term value position.

Look at the next oversold right here. It goes down. What do we see with the

volume signature?

Right away, there is some demand that's coming in.

Why?

Because there is value for institutions.

And this value is actually extreme because it's on the oversold condition.

So how are they going to buy out of the oversold? They're going to be more

aggressive because it's below their value zone.

So here we are seeing this bind on the way up. And this bind is going to stop

once it goes above their value zone.

So somewhere here we are seeing already that more of weak hands are buying on

the way up.

And that produces some emergence of the supply from

professional hands.

Because professional hands are seeing this as a short -term overbought

condition, and they're seeing this as a deviation from the mean.

They know that the price will come back to the mean and probably will overthrow

it again.

So they're shorting into the weak hands liquidity at this spot.

And then as the price goes down again, this action repeats.

An oversold condition for institutions below the value zone creates

a very quick pickup by institutions.

And we see that again in the volume signature.

And then overall, we're definitely trying to see the overall increase in

volume signature relative to what we've seen.

in this area and in this area right here we can see that there there are so many

more institutions that are participating in this rally that suggest a

beginning of a trend and specifically uptrend and not

only that um institutional participation

And again, this is where Steve Jobs came back.

Institutional participation suggests that this is going to be a long -term

trend.

So this type of moves out of the lows, cyclical lows

or secular lows in the stock or in the market, with this type of volume

signature that suggests that institutional participation.

are the best indications for timing for us for a very big move to the

upside that is going to be cyclical in nature. And you could be thinking about

different tactics there, how to trade it. You could be thinking about trading

as a long -term position. You could be thinking about trading it as a multiple

swing position and so on and so forth.

Well, if there is an institutional value zone, then we probably would be

thinking about some value zones for weak hands as well. Please note that I'm

saying here weak hands just because it's both institutions and public.

And how would we define the weak hands value?

So obviously weak hands value zone is going to be associated with the

distribution.

If the institutional value zone is usually associated with accumulation,

reaccumulation, then weak hands value zone is going to be a distribution or

redistribution. So thinking about the concepts of the weak hands and

where, for the first time, they will be excited

about the uptrend.

it comes on the last climactic run into the top of the market, into the buying

climax. So we're seeing some buying on the way up in this climactic

run, and we define this as an excitement or the first point of excitement

by weak hands.

So this excitement by weak hands produces...

weak hands buying into stopping action.

Well, why does this happen? Well, because CO is not buying.

ITF are in the position.

So they're not biased either.

And they still do not provide a lot of supply to the market.

So therefore, this is one of the spots where weak hands

are going to do two things.

They're going to be enjoying the profits.

They're going to be profitable on the left leg to the upside.

And then they are going to be also

able to move the price up.

This is one of the spots where public, or weak hands rather, can have a

big influence on the price.

So, ability to move price

up.

So these are two attributes that are extremely important for us to remember

this spot for weak hands.

Just because this is where they see the value.

Now think about if they saw the value on the way up, as the price goes down and

goes below this value zone, how are they going to view this?

They're probably going to view this

as an oversold condition and a point of value to them.

So what are they going to do? They're going to buy at this spot.

So we can't.

And they're going to say that, oh my gosh, this stock has been so good in

uptrend and I'm going to load up more.

And if they have not been in that position by this time, this could be the

time when they get in.

Now think about what has happened on the way down.

A change of character suggested that the CO is selling.

And also ITFs also identifying this as a trend failure, so they are selling as

well.

So the weak hands is effectively buying the supply from strong hands.

And for a moment, there is a balance and absorption of supply and

uh that suggests the reaction to the upside

which follows

and in this whole reaction right here

to the upside counter to the change of character move

we don't see a lot of the institutional signature, and yet the price goes up.

So that suggests that this type of signature is weak -hand signature, and

institutions were active or actively selling on the way up, on the way down,

then they are inactive.

This inactivity produces a failed upthrust, which we could label as a

tax.

It's an attempt to upthrust above a buying climax, but we can't even do

So here is a failed upthrust.

And then there is some further capitulation by institutions,

probably just ITFs.

They are not seeing the trend, the stock, for quite some time.

multiple quarters is not producing the result, absolute result.

And we'll have to think about what the market was doing at this time and to see

what the stock is doing. I would say that it's probably still outperforming

market at this point, maybe. That's just my guess.

And then weak hands are still seeing this stop in action here as a value

And look at their signature.

It's kind of mediocre just because weak hands do not have a huge signature,

volume signature.

And then there is another failed up thrust, which we will label as an LPSY

because this is phase C. Phase C actually has two LPSs. One of them is

failed up thrust. Another one, LPS as a test.

Then out of that, we see in the TP formation or in the apex formation,

a quick move to the downside, and then on the increasing volume signature. So

that suggests a late institutional capitulation. Usually this volume

will move us away from the trading range that we have had.

Now think about, again, the weak hands value zone.

As the price comes back to this value zone, what do you think?

um you know weak hands are doing they're getting more and more excited right

because this is where they bought before in their minds if i bought there before

and the price was able from the lows to come back to this level this is very

bullish so i'm going to be buying again so uh into this buying

by weekends and we see an excitement with each of the rally with each of the

thrusts to the upside so multiple up thrust situations one two three

into the weak hands value zone and every time it happens institutions

are selling on that excitement of weekends so there is increase of the

here increase of the supply here

increase of the supply going into this area right here as well.

And institutions know that for them the bias is to the downside. And they

know that at this point of time, this is an overbought condition.

And they are looking for short -term liquidity, which is being created by

weekends.

by the excitement of weekends, and they just sell into this excitement.

So that produces more selling and so on and so forth.

All right, let's go to the questions on this.

So trading range, phase C, not as

spring as a question. Well, I don't know if you guys could see this, but this

low is just ever slightly.

a higher low and it's not a lower low so with the higher low we definitely would

put left point of support rather than the spring we could label this secondary

test as a sign of weakness as the spring type action we could do that

we could label this whole thing as a c phase c sometimes phase c would have

type of you know spring and then the test and I'm thinking about this. I

probably relabel this now.

I would probably just label it like this, phase C. So then a spring and

a cuff.

But this one right here is a high -low.

All right, first trading range, phase C, failed upthrust, not upthrust of the

distribution.

Okay, guys, so this is one of the things that I want to talk to you about. So

it's very interesting. For some reason, this group was like this.

So what I really would like you to do is to make

sure that you go and you study all of the concepts that, you know, I taught

guys. Because sometimes I feel that Something that was taught and we're

back to the same question because people just don't kind of like go and study

this material.

This is awfully inefficient.

So I would really urge you to study all of the Wyckoff events, the sequence of

those events, how they come and the characteristics.

So a question about the upthrust of the distribution.

So think about...

the question itself right so we're saying that there is an up thrust after

distribution so just after distribution part is definitely okay but the up

thrust is not why well because we don't really have an up thrust here right how

do we define the up thrust we define the up thrust as the price overcoming the

resistance

temporarily committing to the upside or attempting to commit, and then falling

back into the trading range.

Do we see this type of action on this high?

No.

We are failing. That's why the label in here is a failed upthrust.

Do we do this on the next high?

No, it's a lower high. So again, we cannot overcome it. So we can't really

this.

an upthrust of the distribution just because definitionally it's incorrect.

So I would urge you to make sure that you understand in what kind of,

very simplistically, if this is going to be a higher high in

phase C for the distribution, this is going to be upthrust of the

If this is a lower high, then it's always going to be a less point of

You can remember it like this. But I want you to remember because this is the

second session where I kind of see this tendency.

And I definitely want to go away from this.

First rally into the buying climax.

How do we know that CEO is not buying?

So I'm assuming probably right here, right?

So how do we know volume signature by itself?

Not that big, right?

We also would be thinking if this is a sign of strength.

So we want to see some kind of urgent buying by the seal and

something maybe like this, right, where the signature is still consistently

increasing and there is some urgency to get into this position.

This is more of the technical rally where the volume does not fully

confirm what the price is doing.

And that would be our first guess. But then we could just say that, well, maybe

they are buying. And then we can only know that they were not probably on the

next change of character that falls into the range.

So we could make a mistake there, you know, an interpretation that would be

erroneous, but I think this mistake you could quickly correct on the next

reaction because you would be thinking, why is it that the volume signature

increases so substantially over what we thought the institutional bias?

That should produce some kind of hesitation and thought there.

All right.

Okay, so from Eric.

Let me see. I'm on in the second.

I'm trying to see the whole question.

Okay, here we go. In the second redistribution, trading range in

1995.

We have an upthrust of the distribution below the resistance line. Bruce Frazier

in StockShare defined FAC with LPSY in one of his distribution schematics when

price does not go up. Why label upthrust of the distribution instead of LPSY

as Bruce?

Well, I think that you are misreading what Bruce is saying.

There are two types of...

Again, we're kind of repeating this, but okay, let's just stay here. Let's just

stay in this space.

So two types of phase C that could happen.

So you have to be extremely careful how you refer to Bruce's work, because I'm

sure that Bruce would agree here with me. Phase C, as a lower high,

is going to be labeled left point of supply.

like we've labeled it here and here.

In a different distributional pattern, where we're going to have an upthrust of

the distribution, and this is going to be a higher

high. A higher high is going to be labeled as an upthrust, but because this

distribution of the distribution, this is a legacy name, as I mentioned to you.

before so these are the two types and these are the only labeling

that the method has presented to you so i'm sure that you know you're probably

looking into one of the other schematics um which bruce has shown so

eric please come back to that particular blog by bruce and reread it i'm sure

you just you know

remembering it incorrectly and if you find it with the different type of

labeling you know just email me the link and we'll be very curious to see if

that's true okay um all right let's kind of go away

from all of this um i'm feeling that um we need to speed up a little bit okay

so next chart this is also you know one nuance here for this particular chart.

You could take the whole formation here and just say that this is our phase C,

this is our phase A, this is our phase B, and then we have a very prolonged

phase D.

That would be acceptable, absolutely.

You could also think about two trading ranges, first trading range and then a

second trading range. And I forgot who it was, but a couple of people actually.

did it exactly this way.

So that makes a lot of sense to me. Why? Because I see that the texture here is

somewhat different.

This is a leadership stock that is being distributed on the way up.

And then after a major sign of weakness, we're seeing that the texture is

somewhat different.

Let's talk about Opsros here so that we would not confuse again, you know, the

labeling.

So we are definitely showing an upthrust here, right, because we are overcoming

the resistance and then we are coming back into the trading range. So this is

upthrust because this is a distribution.

This is an upthrust of the distribution.

The same thing here. We're seeing a higher high.

A higher high will be labeled in the distribution or redistribution as an

upthrust of the distribution.

a lower high will be labeled as a last point of supply if we would have had

a lower low let's say after this up thrust right here and we would have

something like akin to this then this point would be labeled as last point of

supply if we would have had a failed up thrust that does not

overcome the point of the resistance and this becomes the lower high, then we

are definitely labeling this as our last point of supply.

So Eric and Philip, please make sure that you come back to the material,

it, and understand why we are labeling it this way.

Okay, so another point right here, you know, was the question of why such a big

gap.

Eric, but yes, I see that you got it.

I understand that you got it. But my point is not that.

My point as a teacher, I want you to learn the stuff that I'm giving you and

to re -ask the same question.

So that's kind of like a point that I'm trying to make. So hopefully you'll kind

of like appreciate the thought behind this because it influences the whole

class.

The question of why such a big gap?

So let's think about what is happening here.

And I know that a lot of you are going to say, yes, it's an institutional

capitulation and liquidation of their position.

But the question is not about why institutions are capitulating or why the

has happened.

The question is more of why a big gap?

So I wonder what you think about this. I think that I've given you enough logic

already throughout this, you know, five, six sessions.

So write it down. Write down your thoughts, guys.

Let's kind of speculate here.

Why do we have such a big gap?

And big is, you know, is kind of like what I want to hear from you for

the reasons of why.

While you're thinking about this, Let me go really quickly through the weak

hands value zone.

So thinking about that this is a distribution, we would be thinking about

hands seeing some kind of value zone and being buyers,

right?

So where would they be excited for the first time?

Into the climactic run, right? So all of this movement.

is going to be weak hands first point of excitement.

And we could see that weak hands operate here.

Why? Because of the volume signature.

It's insignificant and yet the price runs up. So it tells us that the CO is

still holding on to the position and does not provide...

a huge supply to stop the price from going further up.

And weak hands are in control of this market.

Institutional trend followers, hence, they're still in the position, they're

enjoying the run, they're making more money, but they're not distributing

because the definition of the trend was not violated.

So we see from the volume signature that this is definitely weak hands operating

at this point of time.

So therefore, their value zone is going to be somewhere on the last run into the

buying climax where we see some kind of not substantial buying.

And it happens with all of these bars right here.

And then throughout...

this structure right here that looks like a reaccumulation in the

we're going to notice how the casting is going to be done and

how the bind is going to occur also at the specific spots.

And we want to catch this bind as a value zone as well.

And then extend this value zone throughout this whole zone.

So thinking about the value zone, we obviously will be thinking about the

overbought condition and the oversold condition.

So every time we're going to go into the overbought condition, the

behavior of the institutions and the composite men are going to change.

The composite men is going to start selling.

That will produce a reaction.

On this reaction, we could see some kind of violation of the trend.

With this violation of the trend, we will see capitulation by institutional

trend followers.

And this capitulation is going to be early capitulation.

And it's going to be not substantial.

They're going to capitulate around this area right here.

But we have seen from the volume signature, how much did they capitulate?

Did they sell a lot?

Probably not.

At this point of time, Apple is a very hot commodity.

It went up, I think, times five, if I'm not mistaken, off the

lows in 96, even probably more.

We could look at this on the first slide.

So what do you think institutions are doing here? They are unwilling sellers

here, and they are probably just slightly scaling out.

So we don't see a lot of institutional selling.

And that happens throughout this whole trading range.

Look at the volume signature.

Obviously, because of this spike right here, we can't really see a lot, but we

could distinct that this was the area of where selling has happened on the way

down. This is probably just early institutional trend fall and

has been selling throughout.

Once the price comes back close to

the overbought condition, what happens?

We're going down. We're going down.

Now back to the question of why such a big gap.

Well, usually CO and institutional trend followers are going to start selling

in a kind of...

sequential way, right? So they will sell into the buying climax. They will sell

into the change of character. They will sell into the height of phase B. They

will sell into the phase C. They will sell on the major sign of weakness.

And then they're going to repeat this process over and over.

But there is not really a lot of selling here just because the price stays up.

Think about also what's happening in this area in the market.

So the market had topped in March.

And then it had a very big decline into August, September.

So think about how Apple is being seen in this moment of the market history.

it's definitely seen as a defensive stock.

Why defensive stock?

Well, because it doesn't lose value and it doesn't lose relative

value. The market is going down, so relative to the market and to the peers

to a lot of the stocks, Apple is at...

the point of value for a lot of institutions.

They are not giving up this position.

So when the price starts to capitulate, and obviously that could happen on

some earnings and on some events, this is where they're going to capitulate.

But because of how quickly from the value zone for a lot of the

institutions that became weak hands by holding the stock, And it drops so much.

What do you think they're going to do?

They're going to capitulate. This is the event where they're saying like, okay,

I'm done.

I'm going to go away.

So take me out at any price.

And that's why the price drops so much because the demand to sell is so huge

among institutions overnight. It opens up with the gap.

so much selling that is happening at the same time during the day. Now, somebody

is already buying.

There are buyers on the way down all the way because they are thinking at this

price, relative to where it was, this is what, you know,

50 % down, if not more.

If the stock looked so great at this level, why wouldn't it for the value

investor look great at this level?

Obviously, this is not our trade because we are technical traders.

What we need to do is we need to figure out how the emergence of the supply will

be tested.

And until we actually break the downtrend and create some kind of change

character, we can't really make any assessment of this.

All right, let's look at some questions. Let's look at what you guys wrote.

Okay, COO distributed its position.

Yes, so CO, ITF, weak hands, everybody capitulates right

here. So this looks more like even a general capitulation rather than

just like CO or ITF.

Everybody is capitulating at the end of the time, at the end of the point.

Jury is making a comment, end of the quarter, yes, also one of the things in

bad market.

Yeah, so I think it's the market, it's just that the stock, you have to think

within the context of what's happening, right? So right away, I'm giving you all

of the data for the market on this chart, even though the market is not

I'm giving you the time you should remember what has happened during this

period, and then you can create the whole story as to why this gap happens

this, why it's such a big gap.

Okay, from Noesh.

I marked these charts with two upsloping trading ranges as well, but my

boundaries are slightly different. I often get confused around which points

connect for slope and trading range to mark boundaries.

Is it more visual range or precisely connecting specific points?

This is a good question. So we definitely want to identify the

resistance points in phase A, which will be a buying climax.

and phase C, which will be as a higher high in the upsloping structure,

right? We are only discussing the upsloping structure.

We always will have higher high in phase C.

Or maybe we'll have a lower high and then, you know, a higher high in phase

something like this. So we're always looking for these three points.

Points of resistance in phases A, B, and C.

And then we are trying to connect them. And only after that, we're looking at

the automatic reaction and any type of sign of witnesses in phase B to

extend the parallel line.

So that's what I did here.

You could potentially also identify, you know, maybe this height as well.

But as you could see, this is just another parallel line to the one that

created. out of the bind climax and up thrust right here um so um this is just

another level of resistance another level of support and then the second one

i'm taking here phase a and phase c please know how phase b has

this up thrust action above this resistance why i did it like this again

is extremely important low right here And also, obviously, yes, there is some

kind of visual attempt to fit

the definition as well. And I think that you have to understand to what

reasonable extent you can do this. What is that reasonable extent?

Well, seeing the significance of this height, connecting on the same level,

then seeing the significance of this low.

oversold condition, and then look at how there is a commitment and then attempt

to rally to the same level.

So quite a lot of concepts that fit together in this upsloping range.

And then obviously the upthrust action is just an upthrust in phase B.

All right.

Good question.

All right. Let's go even faster.

So here, a couple of things that we need to discuss. Obviously, institutional

value zone, we just looked at this range.

We looked at how the buy -in came on the daily chart right here.

This is definitely a lot of value on a short -term basis, a lot of liquidity.

Again, coming out of this zone, now the price is cheaper, and there is

a lot of value for institutions.

Please note that every time...

It went below the value zone into the oversold condition. The price recovered

really fast, really fast.

And only in phase C, this is where we see that the demand is

inactive.

And until it starts to emerge again and there is some

kind of institutional accumulation on the way up,

and we see this from the volume signature, only then the price will

up because this demand emergence

will produce buying, and

buying obviously will produce the momentum up, and that will push the

And again, we are talking about the concept of emergence of the volume

specifically increase of the demand, with the

movement of price up. So we're kind of seeing how the result to the upside

is following the demand signature.

So that's the first condition.

So this, the absorption and this movement of the price,

obviously will be shown on the increase of the momentum.

The price will start moving and it will start moving faster

to the upside.

That will show a relative outperformance.

So it's very interesting.

to observe how institutional clients are always talking about this thing, the

third one. And in effect, I mean, we're teaching you the same thing, guys,

right? Because relative strength is extremely important as a subject. It

identifies, you know, the outperformance, so it suggests

behind it.

But if you think about the origination of the relative outperformance, it

comes... once the momentum is increasing and it comes after the emergence of the

volume signature, that would suggest that the demand absorbs the supply and

capable of pushing the price up.

Only when the effort and the results are synced, that's when everything

else is going to happen.

So kind of interesting how it's being all interpreted.

What else?

There were quite a few labelings like this with phase C right here. I don't

any problems with that either.

Because if you're taking the position in this area, you're still profitable for

many years ahead.

The only thing that I would mention is that this area right here has its own

texture. So look at the price, how it behaves. Look at the...

volume signature as well everything is kind of like of the same type of the

texture we have a stop in action and then we have the volume on the way out

sometimes this type of volume activities define the ending of a

downtrend and the beginning of the uptrend or they define the boundaries of

whole trading range you could also think about this in much larger terms look at

this volume signature right here defines the beginning of the trading range look

at this volume signature here defines the beginning of an uptrend so the

signature emerges sometimes at the points where either where there is a

aggressive absorption in the points of the liquidity where everyone's panic is

panicking or where there is now um

a shift in sentiment from bearish to bullish.

And a lot of the institutions are trying to get into this position as soon as

possible and the urgent volume signature or the urgent demand signature occurs.

All right, here's the same trading range only on the daily. This is that big

phase C that I've labeled. So let's look into this really quickly.

We're seeing that there is a lot of buying here as a stopping action. Then

is a lot of buying here on the way down.

So that kind of defines that value zone where institutions are buyers. Look at

every time it has a pop -up like this, a spring type of action once

we go into the oversold condition.

Isn't it great to understand what spring is all about?

And then once you see that, you know that every time, if this is a true

accumulation, then every time you have an oversold condition, you have some

of attempt of the price to come back and to return to the trading range,

return to the area of the resistance.

And hopefully on one of those rallies, like this one right here, the price not

only will come back to the trading range, but overshoot it, overshoot the

zone, commit to the upside, and then react into this area of the support.

Now something even more significant has happened here. There are two things that

we could see from this area where, excuse me.

Sorry about that.

All right, I'm back. So there are two ways of how institutions bind in

this particular area.

They are buying on the way down. We could see this from the volume

This volume signature increase suggests that, yes, supply is increasing and

supply is still dominant over the demand.

But at the same time, we already see that Demand is behind this volume

as well. And demand is not only present, but it's increasing.

Therefore, it's not only the increasing demand, but we

see from what has happened afterwards, it's a stopping demand.

And therefore, we're concluding that this could be an institutional demand.

And then we see a different type of institutional demand.

It's the demand that produces this type of move on the way up where demand

signature is extremely high, volume signature is extremely high. That

an urgent institutional accumulation on the way up. And think about the urgency.

What does it really even mean?

Urgent demand.

That probably means that institutions are seeing so much value currently that

they want to get in into this position and just stay in this position.

And they want to get in at the lowest price.

So that's why, because a lot of them are trying to get in as they see this value

proposition, valuation of the stock somewhere higher in multiple years.

They're trying to get in at any price. They don't really care.

Okay, so what else here?

One of the interesting things is just the phase C definition.

So the thing about this is it could be interpreted in

so many ways. I mean, I could see that somebody would be saying that this is a

bind climax here because there is a climactic run.

I wouldn't argue with that whatsoever.

But I also could see a climactic run here.

And obviously, I'm looking at this reaction right here and comparing it to

of the previous reactions.

And this looks like a change of character. If this is a change of

then this is phase A, and we are in the trading range.

So therefore, the next move up may be just a definition of a strength that

suggests a reaccumulation rather than a distribution.

But we still would be thinking that this is an attempt to retest the previous

high as a secondary test of thrust action just because we overcame,

then came back.

So then think about the number of tests, right? So test number one, test number

two, test number three. And test number three happens as a higher low.

Could phase C have this type of characteristics?

Yes. What should happen after phase C? Well, we should commit above the

resistance that was created in phases A and B, and now everything should click

at this point.

And commit it in a specific way. We want to see sign of strength

characteristics.

What are those?

Increasing volume signature, increasing spread.

And we see both of those.

And relative to the previous rallies, it's definitely much, much better.

Plus, on the major sign of strength, we are committing above, and then we are

reacting exactly to the area of the support.

So phase C might not be seen right away as phase C.

The tendency is going to be to label this as phase C.

And even that is going to be sufficient.

just because if you think that this is phase c your point of interest are going

to be all around this area which is the area of where we want to come in and

establish the position

all right uh

let's come back to questions um second trading range late december marked as a

spring um can it be um right here i'm assuming

Again, if you think that this is phase C, then yes, the proper labeling would

a sprint.

Now, in this case, because I'm labeling this as phase B, in phase B, we are

going to have sprint type actions, but not sprints.

But this is just relative to this formation, to the local formation, you

label it as a sprint.

relative to the whole trading range, then this action in phase B is going to

interpreted as a secondary attempt to retest the previous low as an

automatic reaction.

All right.

Let's kind of see what else is interesting here.

Yes, on this chart, a

lot of you, Put phase C right here.

So this is a little bit difficult here just because this is

an apex formation.

It's not your usual horizontal range.

But you have to apply concepts.

And that's why I ask you guys, please go to the schematic.

Please go to the explanation of all of the Wyckoff events with the

characteristics. And think conceptually.

How would we do that?

And move to the upside, it should end somehow and somewhere, right?

Where is that stop in action?

Well, probably here.

Why? Well, because we experienced the biggest reaction after that.

So most likely, this is a change of character.

If this is a change of character, this is phase A. If this is phase A, then

is an automatic reaction.

Then the next attempt to go up is going to be a secondary test.

It commits above by one close.

So an element of an upthrust.

But because of the character, of the change of character, right? So it's not

that robust to the downside.

It does not retrace more than, you know, it doesn't go to one half of the

previous move.

It looks very bullish. So therefore, upthrust action, because we're thinking

that this is still a reaccumulation.

Plus, it also happens at the level of the previous more significant climactic

action. So we're thinking this could be a major sign of strength and then a

major backing up action.

So as we've defined phase A with all of those elements, then we want maybe to

think about either the number of tests, which is one, two,

and then three. And then think about other concepts.

In apex formation, we will never see a very prolonged backing up

action. We will never see also a very...

long major sign of strength.

It's going to look exactly like this.

It's just a slight commitment to the upside, quick retest, and then off we go

the races, just because of the apex formation and the characteristic of that

apex formation.

Usually in the apex formation, a lot of the volatility is going to be in phase A

or early phase B.

This is where the institutional rotation will happen.

With this institutional rotation, we are going to see the exchange of shares

between strong institutional hands and weak institutional hands.

And then after that, into the apex formation, the volume signature is going

diminish significantly.

this is where SEO is inactive.

And this is where trend followers are inactive as well.

And this is where also weak hands are somewhat inactive too. So we have that

diminishing volume signature.

And it's only on the breakout, this is where some of the institutions are going

to see again some value, probably on some event.

and they're coming back in and that creates that momentum that push that

the price out of the apex formation in here uh let's just

quickly look at the value zone look at this trading range so there's some

uh institutional pickup on the way down there's definitely a lot of buying here

and then on the way up So this defines this whole value zone. And then as we go

down, this looks more like a shakeout.

It should not be labeled as a sprain. It's labeled as a sprain just because of

the downslope. But if we're looking at the horizontal range, like this one

here, this is definitely the character of the shakeout where we have multiple

closes committing to the downside.

It's a significant move to the downside.

What else we don't see here is that you know, the volume signature has not

increased that significantly. So that could make it an argument for the

But then an oversold condition where it quickly comes

back to the value zone and then overcomes it.

And those value zones, they change, right? So from one level, they go to the

next level where we see a lot of institutional volume.

And, again, in the range where we go into overbought condition, what's going

happen? Professionals are going to sell.

Where we go into the overbought condition, there's going to be an

sell.

Where we are, well, we don't have an oversold condition here, but here was an

oversold.

So, a quick recovery.

Okay, quick questions.

Second trading range,

late December.

Oh, I think it was a different, it was a previous slide. Okay.

Second trading range.

Secondary test has been up thrust action.

It has price action and volume signature as buying climax.

I understand you're just curious.

Yeah, it has those characteristics.

But this type of characteristics are not just necessarily going to be present at

the buy -in climax.

You can have different other spots that would have expending spread signature,

expending volume signature.

Excuse me. So my logic here was just based on interpretation of the change of

character and the stop in action of the buy -in climax.

But if you would put it here, buying climax, as I mentioned before, you could

label it in a different way. You could probably think that this is phase A

here, and then this is B, and then this is C again, and that would be okay.

Again, the labeling does not really matter if you're making a profitable

That's the whole purpose of everything that we do here.

All right, so what do we have on time? I was kind of thinking that we're going

to go into 6 o 'clock today, so we still have some time. Okay.

All right, so this one was somewhat easy.

A lot of you guys just kind of like nailed it everywhere.

I like that a lot of you put here phase C right here. Again, we are talking

about an attempt to upthrust.

And just because...

It creates a lower high.

That's why we label this as a last point of supply and couple of tests into

that last point of supply.

Major sign of weakness. Look how in the downsloping distributional range, we are

seeing a commitment to the downside and then attempt to...

come back into the trading range, and it comes exactly to the point of the

resistance that acted before as the sloping down support.

So all of the concepts are there. They're all correct.

Okay, well, it is definitely a very interesting Wyckoff story here, but I

that maybe we'll skip this for today.

Look at this value zone where we are seeing that a lot of institutional

buying has happened in this area.

So where is the price?

It's right here in this zone. So that defines that institutional value zone

us. Anything below this is oversold and will be quickly bought in

by institutions.

Look at this.

Look into this. And we kind of could see how...

These three points are creating a sprint type of action

just slightly below that institutional value zone. So that's

kind of like a true definition of a sprint to me.

It's an oversold condition below an institutional value zone

that produces a quick...

absorption of the available supply below this zone, and that brings the price

back into that zone very fast.

And that's exactly what we're seeing here.

Another interesting thought here is that look at the volume signature.

Once institutions are in this position, they just basically don't buy.

They consumed, absorbed all of the supply available, and they're just

So as the price retests the lows, every time in the

oversold condition, there is some kind of small pickup of the supply, and that

absorbs and kind of concludes the absorption process. That absorbs

left.

to what they already have bought, and they have bought so much, that at some

point, supply is no longer available, and even an inactivity by

the CEO produces a move up, just because supply is

so low.

So this is a very important point. We will come back to that on other slides.

All right, here.

Okay, guys, I think that what you'll do here is let's just do

this on your own. So let's do a self -review.

So this slide.

Okay, so this one is interesting.

And a really good question from Nilesh.

Let's go first through the distributional weak hands value zone.

So again, we know into the buying climax, the first point of excitement is

to be by weak hands. It's going to be on the climactic run, which is this.

And we see that from the demand signature.

And we define the zone throughout this whole range.

Now the question...

that was asked by Nilesh is, at what point do we need to consider this as an

upward slope in trading range?

Because originally, this is what we would be thinking. And originally,

how I labeled this range when we had this change of character that was well

-defined with the increase in volume signature and the biggest reaction in

upswing that we have seen.

That suggested... a non -consolidating environment a trading range and uh the

question that now is asking is very important at which point would we be

thinking about up sloping structure rather than more of the horizontal

and i think that we would be thinking here and i think this was another

from somebody or maybe in this question we could see this Would we be

biased here?

I think that without thinking too deeply about this, and by deep thinking, I

would be thinking about what were our original targets.

And actually, their original targets suggested exactly the stop in action

somewhere in this area.

And those type of PNF targets

were off 2000,

8 2009 trading range so that's a big trading range right there um

uh so if we are in the vicinity of this targets we should be extremely careful

and we should be uh stopping listening watching as to what

the price and the volume is showing us and telling us having said this

It seems that this area has the texture of the reaccumulation.

We see multiple tests on the diminution volume signature, the tests that are

higher lows, and we have higher highs, local higher highs.

So that looks constructive and bullish.

This reaction right here that has some volume signature does not produce a big

result to the downside.

It's diminution as a result, which is bullish.

short -term bullish on such a big effort signature.

Also, it stops exactly at the first point of the first automatic reaction.

So that's also a good symmetry, bullish symmetry for us to see.

So I wouldn't mind actually

having a position or thinking about establishing a position at this spot.

So somewhere here on the breakout, that's another possibility.

And then once you are in this trading range, you're probably going to close

this position here. This will be your exit.

So you guys kind of could see that my strategy is not necessarily to be

every time. My strategy is to be sure that I'm going to

see the opportunity and I'm going to use this opportunity.

Obviously, on a much deeper level of thinking, I mentioned the target zone

here, and I mentioned this really briefly. But this was a very consistent

selling right here.

have produced some kind of hesitation.

But the actual recognition of this pattern came right here. And the reason

it came here, you know, on this reaction or on this failure is because we're

still talking about a leadership stock that has a structure

of the distributional structure of higher highs, higher lows.

And those are going to have a lot of reaccumulation characteristics in phase

So it's extremely hard to figure this out until it actually shows

itself on a change of character out of the trading range.

But if you train your eye to recognize this failure, so there is no

up, there is a failure.

then somewhere here in this zone, you could change your bias.

And that's what I do with a lot of stocks. And I've shown you guys with

just recently where Navadir has been such a leadership stock.

I've tried to short Apple in this campaign to the downside and kind of

picked up just, you know, what's correct on the bias was.

you know, premature to exit.

But the concepts are the same. Leadership stocks are going to be

a different way.

And you have to sometimes change your bias on the change of character after a

new high. And sometimes it's extremely difficult to do just because mentally

it's hard to do.

Now look what happens with the weak hands value zone as the price falls.

and comes into the oversold condition, first of all, the recovery is very

That suggests that still there is some kind of value to some of the weak hands

at this point of time.

And then look at the second rally. It comes exactly to the point of where weak

hands were starting buying.

It excites buyers because they are thinking that this is an oversold

And then institutions are just selling into that excitement.

Both of the rallies have that excitement characteristics behind it in the way

how the price moved.

And then on the way down, we're seeing that

late institutional capitulation, it coincides with the institutional

value buying on short -term liquidity and long -term value.

So in other words, why is it so confusing?

Why are we using institutional in both cases?

Well, the drop to the downside kind of suggests in the volume signature that

institutions are present.

They are sellers at this point of time. Or rather, I should say, specific

institutions are sellers.

And then other institutions at the same time are buyers because they are seeing

some value. And they are saying that even so early on in the process of

establishing the new low, establishing the new accumulation range, we are

willing to come in and to buy because there is so many stock shares that are

available at this point of time.

So they will do exactly that. And this is where we would put that first initial

value zone.

And then every time we go below that oversold condition, we quickly recover.

Go below that oversold condition, quickly recover.

Go below, quickly recover.

And on the recovery that takes us throughout the whole trading range,

when we are identifying a major sign of strength, changing of the environment

from a trading range to the emerging uptrend thing. And we only need the

confirmation by the backing up action. Now look how the price...

comes back into the value zone.

And again, that creates what? An oversold condition, but now an oversold

relative to the price that is above the value zone.

And again, it acts as a screen type of price

action where the price goes below the support and then quickly recovers. Why?

Well, because somebody sees value and picks it up.

somebody was seeing value here and then seeing more value even lower.

And that should kind of trigger your thinking about,

actually not there, sorry, here and here.

This type of the decline into the value zone and the way how it recovers so

quickly, you should be thinking that the volume increase

suggested that there is a lot of demand that's coming in. First demand was

absorbing the supply, and then the second demand was absorbing whatever was

left. And because supply has diminished, the absorption was faster, and the

price recovered pretty fast.

So think about that type of logic.

If you are thinking this way, then you might be even coming in into this

position here.

Because you might be thinking that if this is an oversold in the backing up

action, this could be the lowest low in that backing up action, which it was.

So, and it could create some kind of like maybe apex formation and this low

going to be the lowest low.

So, we want to start thinking this way.

Okay.

All right. So, this one is going to be for your home review.

Let's do that.

All right. So now let's talk about the volume and spread analysis. And we are

to 5. Okay, great.

I want you right away to concentrate on one idea and one idea only.

When you are looking at the volume and spread analysis, and you probably have

seen it from different sources, different software sources.

So the biggest mistake that I see students do with this material is that

see the signal. They could interpret the signal, but they do not

look into the context of where the signal occurs.

In other words, you need to understand the environment that we are in and then

look into the VSA signal and interpret.

this signal relative to that environment so let's look at that and we're going

to start with basics and this comes actually from one of the ink students

blythe he is an md and jerry has taken hanks

classes uh many decades ago and he has created this kind of like uh you know a

small

spreadsheet references to the volume and spread and the way how they behave.

So I'm using this first slide just to give the credit to Jerry and also to

go through some general considerations about the spread and the volume. So

look into this.

So under the spread, the increase in spread would suggest that there is a

resistance to the price progress.

Decreasing spread would say the opposite, some resistance to price

then the average is going to just express the normal trend of price

Volume is going to be much more difficult.

General considerations.

Usually volume is going to be associated with the force behind the power.

So we usually would think about the effort behind it.

Volume usually expresses the quality of supply and demand, and we'll talk a lot

about this because we will be creating those volume equations with the supply

and demand.

Increasing volume in general is going to be usually suggesting

supply.

That's number one in a lot of cases.

but then also it will, in some cases, will

show the emergence of the demand.

And we will just need to be aware in which environments, in which contexts

we are interpreting that signal between the volume and the price.

A very heavy volume usually is all about the supply, but sometimes...

there's going to be an urgency to accumulate, and that's going to be an

absorption on the way up on the major sign of strength.

And we've seen that.

A massive volume signature usually will indicate the climactic action.

Decreasing volume signature would always, we'd be thinking about lessening

the force.

And then a very light supply signature is going to indicate,

and I think I should take this down. This is actually not necessarily

Okay, so let's just keep it like this. Increasing, heavy, massive, and

decreasing. So those are general considerations about the price and the

Now let's look at specific scenarios.

And I've created this slide for you guys.

so that you would print it out.

And this is when I say print this out, put this in your library, I mean study

it, have it in front of you as a reference so that

we would be on the same page.

So one of the things here about volume and spread analysis

that I keep repeating is the context.

The context...

is going to be the definition of the environment that we're currently in

so the context uptrend and we have different scenarios where let's say

increasing and then at the same time we see that the volume signature is

increasing on the same bar so both both uh result is

increasing and effort is increasing how would they how would it look on the

volume equation right so volume is increasing demand is increasing probably

than supply and we would be thinking that with the expansion of the price

on the healthy increase of the volume signature supply might be actually going

uh lower it's still present but it's diminishing and demand is not only

but it's increasing

So effort is increasing and result is increasing.

It's a bullish activity and we should expect a continuation of the uptrend.

Second scenario.

This is where a spread is decreasing and it still happens on

the increased volume signature.

So what does it mean?

We have a decreasing spread, which means a decreasing result.

And we have an increase in volume, which shows us an increase in effort to push

the price up.

So in other words, there is an increased effort to push the price up, and yet it

can't do so.

Why would that happen? Why would there be some kind of stopping of this

progress? Well, it only can happen with the emergence of the supply.

So we know that supply...

is increasing and demand is still winning because this is an up bar the

this bar is higher than the previous bar close so demand is still dominant over

supply but because supply is increasing it suggests that supply wants to

stop the uptrend from going further up so therefore short term we will

this as a potential bearish implication

And short term, we might be expecting some kind of reaction out of this area.

Third scenario in the advancing markets. Spread is decreasing.

And with the decreasing spread, we have a decreasing volume signature.

So this is an opposite of the volume signature that we had in scenario number

two.

So how would we interpret this?

Decreasing spread.

means decreasing result to the upside.

And that happens on the decreasing effort.

And here we might be thinking that demand is actually decreasing on the

decreasing volume signature.

And we probably would be correct. There is a lot of increase of the demand on

the previous bar.

And then after that, the demand is exhausted.

And it's not as much as on the previous bar. So it's going to be shown in the

volume signature and it's going to be shown in the result, in the spread.

With the supply, this is a little bit difficult here for us to say from the

volume signature.

Our natural inclination is going to be that supply is decreasing as well, which

is because the volume is decreasing.

And I think that regularly this is what I would go for.

But I also could see how supply could stay at the same level.

And that also would suggest some kind of bearish behavior.

And also supply could slightly increase from the day when the, let's

say we had the day like this, where demand is increasing and supply is

decreasing. So imagine that the volume signature is even lower.

So this could mean that supply also is decreasing.

Well, one way or another, what is happening here is that Demand is

and that suggests some kind of vulnerability to the reaction.

So it's interesting how in both cases number two and three, we

are suggesting that the reaction should come.

But yet, there is a subtle difference here. And hopefully, guys, you already

know what it is.

And that subtle difference is in the emergence of the supply on the volume

signature that is increasing.

This is more bearish

than the

scenario where the volume decreases and supply might be decreasing as well with

it. Because that would suggest that, yes, demand is exhausted.

But at the same time, there are no selling. In case number two, demand

there, but supply is definitely present and it's increasing. So somebody's

selling. And that's kind of like that subtle difference between number two and

number three.

Number four, increasing spread and decreasing volume signature.

So it's different than scenario number one.

How do we interpret this?

Increasing result in the uptrend. We're having a big spread to the upside on

the decreasing effort.

So the decreasing effort suggests a decrease of the demand

together with the decrease of the supply.

And it's this decrease of the supply that makes it a bullish scenario because

it basically tells us that There is no one selling at this point, and therefore

supply is not available, and demand is also decreasing, but there is no need

a lot of demand to push the price up.

We would refer to this type of action as an ease of movement, and we'll talk

more about this.

Ease of movement suggests a progression of the price in the direction of a

current trend.

decreasing effort where the opposite force whether

it's a supply or demand is decreasing as well last

one number five spread is increasing volume is increasing and it's increasing

massively so there is a massive volume signature and that represents a

massive effort to push the price up.

And usually we would see this on the chart as like a big, big volume spike.

And we would be talking about the volume spike as the massive increase in volume

that suggests that the demand is still there and it's increasing as well.

But at the same time, supply is increasing too.

It's not only present and it's not only increasing.

Relative to the previous examples that we've seen where a supply might

we are seeing that here an increase of the supply is substantial.

And that suggests institutional selling.

And with institutional selling, the short -term scenario is always going to

bearish. And usually that's what kind of produces those stopping actions as

buying climaxes.

This is where a lot of exchange of shares is going to happen.

This could be a terminal buying climax. This could be intermediate buying

climax.

Usually it would happen into the overbought, overthrown condition.

That's kind of like a preferred scenario.

It also could have, we could also see it in the trading range.

maybe a climactic type of action into the point of the resistance.

And then this could act maybe as an upthrust in that structure.

So that's a possibility as well.

So let's see if we have any questions on this before we move on.

Questions, comments?

This should be probably...

Easy to grab as an idea.

The only thing here is that I want you to concentrate on is, and obviously I

want you to go through this as you go through your homework.

I definitely want you to remember this scenario.

All right, so now Lesha's asking, how do open and close levels impact?

these interpretations?

I think we're going to answer this question a little bit later on, but this

good one, so let's keep that in mind.

For now, we just want to concentrate on the spread and volume in that

relationship.

Okay, let's look at the next one.

In the declining market, where the context is the downtrend, let's look at

all of these scenarios again.

They're going to be just a mirror image of the ones that we looked for the

advancing market.

Spread is increasing, volume is increasing.

It's an increasing result with the increasing effort.

And when the volume signature is normal, this is just a normal activity in the

downtrend action.

This is where supply is going to increase and it's going to still

demand. Demand could be very easily decreasing at this point of time. The

-term bias for this interpretation is going to be bearish and a continuation

the downside.

Next one, in scenario number seven, decreasing spread and increasing volume

signature. So we're seeing that the spread has decreased significantly, and

the volume signature still is going up. So we have a case of the decreasing

result,

happening on the increasing effort, where supply is still increasing,

but we already see some emergence of the demand.

And this demand attempts to stop the downtrend.

That's the intention.

Just because the volume signature is so high, that suggests that this emergence

of the demand could stop the trend from going further.

further down. And by the way, when I say that stop the trend, it could be even a

temporary stopping. It could produce just a temporary short -term rally and

continue with the downtrend. Or it could produce a more meaningful move to the

upside. It's all contextual. We will have to look at where exactly it

But for the short -term buys, we're always going to be thinking bullish in

scenario. We would be thinking that Demand is there. It's emerging. It's

increasing. It's absorbing the supply.

So the downtrend is vulnerable at this point of time.

The same would happen on the diminishing spread and the diminishing volume

signature.

We would be thinking that demand is diminishing at this point.

Now, the only difference between this and the previous scenario, scenario

seven, is that in scenario number eight, supply is decreasing as well. The

overall signature, volume signature, is going down.

So most likely, we're going to have diminished supply and diminished demand

the same time.

Now, that's actually still preferable to

the bearish scenario, just because demand is

not there.

Demand is poor.

diminishing supply could push the price further down.

Okay, and this is where I see the mistake. So this would be, oh no,

that's fine.

Okay, so next one, number nine, increasing spread and decreasing

volume signature.

So if we would compare it to number six.

That would be a good comparison. I probably need to shift them a little bit

here. Okay, so what do we see on the results? Obviously, increasing results

this type of spread.

And then it happens on the decrease in effort.

Volume signature goes down. So that suggests both decrease of the supply and

decrease of the demand.

And that suggests, again, and ease of movement, as the price could move

lower on diminishing demand signature, and therefore it is a short -term

bearish interpretation.

I see the mistake right here. It should be bullish here.

Decreasing result, decreasing effort.

Decreasing demand.

Just a continuation.

What did I do on the previous slide?

I see.

Okay. I think this is the one that should be bullish.

Apologies for that.

So vulnerable to rally. So yes, bullish.

I was thinking like, I'm going to make a mistake somewhere. So this is it.

Okay, so ease of movement. And then the last one is the climactic one, right? So

selling climax with the massive volume signature, massive effort behind it.

Supply is increasing a lot because of the panic he is selling by weekends.

But demand is increasing at a much faster rate than anything that we've

before on the demand increase.

So therefore, we're concluding that this is an institutional demand, and

therefore, it's bullish.

A stop in action, reversal, and

attempt to rally.

Okay, yeah, thank you, Philip. That's great. I like the fact that you like the

slides. Yeah, we're trying to make them simple, but yet very informative.

These are the slides that I want you guys to print out. Again, you know, in

case right here.

Let me just correct this right away.

So here it's actually bullish.

All right, guys, so something to think about, study, print those out, go

through, because we're going to use those a lot in our group exercise.

Speaking of homework, so this is the first homework from this class. We are

going to look into the volume and spread analysis, and what I want you to do is

to visualize all concepts from previous two slides, number 19 and 20.

on any of the charts.

So take all of these 10 scenarios, 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, all of them,

and find

examples on preferably

one chart. I am not expecting you to send me 10 charts for different

I want you to find maybe like one chart that would contain If not all of them,

then the majority of them. And just send this slide to me or chart

and identify all of these 10 scenarios.

All right, so that's homework number one.

Now let's talk about the laws of supply and demand and effort versus result.

So as you know, Wyckoff Method has three laws.

The first one is...

the law of supply and demand.

And on a very basic level, it just basically says that if you

have more demand than supply, then the price will go up. When you have more

supply than demand, then the price will fall. And sometimes I think we

overcomplicate our volume and price analysis and we forget about this simple

interpretation of the supply and demand.

and what it means.

So I want to point your attention to that.

Now, the biggest law for me in the whole methodology is

the law of effort versus result.

Because effort versus result encompasses both a situation where a supply is

larger than demand and the price goes down.

and when demand is larger than supply and the price goes up easily.

But it also suggests a different scenario.

It suggests that when we have an increase in effort

and decrease in the result,

we are going to have an opposite

counter to the general observation of the increased effort conclusion.

We will basically say that the price is going to do an opposite thing.

And that's what we need to learn. And that's why the law of effort versus

is so important.

So how would we measure the effort? Well, obviously we're going to look at

volume signature and we're going to say that volume is just the representation

of the effort.

But we're going to be a little bit more specific about the effort.

And to me, effort is either increase or decrease in the volume signature.

It's not just the volume signature itself.

It's the way with which the volume changes right so we usually would say

see an increased volume signature that would mean that the effort

to push the price down has increased a lot

and what do we see we see some progression but we also see some kind of

action that suggests that behind this increasing the volume signature there is

some demand signature

and there are some buyers.

Because of the extreme volume signature, it's an institutional buyer.

And actually, we know exactly who was buying Goldman Sachs in 2008

in September. There was some news that came out during that month that Warren

Buffett was buying the stock through warrants at a price of $120.

Please note that the price went below $60.

And he still held on to that position, obviously because of the warrants. I

understand that.

But the CEO type of institutions are thinking in a different

way than we do.

And our task is obviously to understand how they think and how they behave.

So, and this is what we're studying in this course. And you could see from this

example, if he's buying, you know, the price goes up and then it

observes a lot of available supply at this level.

So then the next time the price goes down, supply is going down and someone

is buying.

And then all of the other times,

Again, supply is going down. So there is absorption process that is underway

that has started with Warren Buffett purchases here.

And then whatever he observed is no longer available in the market or

whatever other institutions observed at this point of time. And therefore,

supply is still going to be relatively high to the averages.

relative to the previous spikes is going to be smaller just because absorption

has happened.

So what we want to see from the effort is the increase or the decrease of

effort.

And then obviously when we're going to have an extreme increase in effort, that

usually is going to be associated with gaps, with stopping actions, with

momentum type of bars, and so on and so forth.

We need to understand how we will judge the result, how we would assess the

result. Obviously, results will either increase or decrease as well.

So I've developed specific measurements, and those are just for our

WTC course.

I want us to look into the increase or the decrease of a spread or a

true range.

And we'll talk about this in the next class.

We're also going to look into the close. And we will be thinking about two ways

of how to address the close.

And the question from Nilesh was previously about how would

the close or the closes influence our interpretation

of the result.

So we will look into the close from two perspectives.

Relative to the daily spread or a true range, right? So we would be looking at

how do we close relative to the

actual height

of the spread, right?

If we're closing in the upper part above one half of the spread, we're going to

interpret this as bullish.

If we're closing below one half, we are going to interpret it as bearish close.

And then we're also going to look at the closes from the perspective of the

previous close. So we're going to look at the previous close, and then we're

going to make a judgment as to...

the next close, and we're going to look at the progression of close to close.

Because think about closes as the commitment of institutional

traders in the direction of the current swing or current trend.

So it's going to be extremely important for us to see what's the progress

between one close to another.

And then the third one is going to be extremely important.

And it's going to be somewhat difficult for

us to remember that this is something that we will be looking at. It's the

intention. And the intention behind the bar is always going to be overcoming

some kind of commitment line. It could be a resistance.

It could be the previous day bar high.

And if we see that commitment above, we're going to say that the intention

fulfilled. If we're going to have a bar that comes close to that, maybe

even attempts to commit, but then comes back, we're going to say that the

intention to commit above the commitment line or the specific resistance line

has failed. So therefore...

As a result, we're going to say that intention has failed. We're going to say

no. And that would mean that the result is diminishing.

And that's a very, very important point.

Volume spikes.

Well, we kind of discussed those in the previous two slides, but still again, up

spike is going to be on the up bar where demand still dominates the supply, but

supply is already increasing.

and it's producing some selling.

The down spike is going to be where supply is going to dominate the demand,

demand is already increasing as well, and it's absorbing the supply at that

point of time. It's adjusting the stop in action and the reversal.

So, again,

this is something that I want you to remember by heart.

What do we look at in the effort? What do we look at in the result?

Especially how do we measure the result? That's extremely important.

Then I also want you to understand that in some cases, for instance, in the case

of this latest reaction, we are going to have an increased volume signature

that would suggest or equal an increased downward pressure.

to the downside is increasing.

And we're gonna look at this reaction and we're gonna say this reaction is

actually not that big.

It's actually in line with the previous reaction and it's less than the

reactions that we've seen before at the beginning of the move. So therefore,

we're gonna say that the result to the downside has decreased.

So what's interesting is that Here, there is an opposite

trajectory for effort and the result.

The effort is trying to stay up and is trying to increase and

to push the price up. So the effort to push the price up increases while the

result is somewhat mediocre.

And this is where this law of effort versus result is so valuable.

That increased effort on the increased volume signature and inability to push

the price down would suggest that something is interfering.

Something is stopping the

selling from pushing the price further down.

What could it be?

Only one thing.

Buying.

Or demand?

Well, not just a regular demand, probably institutional demand, just

the volume went up so high and the public cannot have that type of volume

signature.

And that's why this law is so important.

Out of all of the three laws, if you will remember one, remember this one.

Remember the effort versus result.

Okay, next question. Should the increase or decrease in volume be compared to

local volume signature or meet long -term levels as well?

Now, again, really good questions. I like that.

It's just that they're a little bit ahead of where we are. So we'll

discuss that during our exercise, and we'll definitely discuss both, the more

local increase and more.

long -term increase, and we'll just go through this material.

Okay, now the exciting part.

Okay, so we are starting our group exercise, and I will need a volunteer at

point. So think about this for a second.

Meanwhile, our exercise is going to be devoted to both volume and price

and price structural analysis.

This is the exercise where we are going to combine

the knowledge that we got on the price structure, and the new information that

I'm going to still keep giving you through all of the five classes that

going to have on volume and price.

The assignment for this exercise is to identify what is dominant, supply or

demand. And we're going to dissect this either with the single bar analysis or

with the SWIN analysis.

We, as I mentioned, are going to combine the price structural analysis with

volume analysis.

I want you to make your call on what kind of most probable

price action we will have after the point of discussion on

the chart that we're going to look at.

I'm also going to ask you for labeling of WICA phases and events.

of any of the trading ranges that you see.

And most important task as a homework task is going to be

to watch the video of this exercise again and to

make some notes.

And then I want you to email these notes to me.

So that's the assignment for this exercise.

Now let's look at the

at the chart.

So this chart is going to be presented to you like this.

There is no reference to the stock that it is. There is no reference to the

time. And I've learned that this is only just a distraction for students when I

give this type of information.

So it came to the point that I even forgot what the stock is.

I do not know the name. I do not know the symbol. Please don't ask me.

But what I'm really, really concerned about here with this exercise is the

way how we're going to analyze this.

This is going to be such a foundational exercise. This is something that I want

you to be extremely serious about.

I want you to be uncomfortable about this exercise because there will be a

of concepts that we're going to combine.

And it's first time.

It just might, you know, see as kind of like a, you know, a difficult thing to

do. But then something will click and the understanding will come to you. It

will emerge in your mind.

And that's what we're trying to do with this exercise.

To combine the volume and price with the price structure and to start

talking about...

the logic of the analysis, how it flows, how do we analyze it. And because of

this logic, I'm trying to create a specific way of how we would be thinking

about this analysis.

So I want you to think about a bar analysis first.

And each bar, not each bar, but each significant bar that I want us to

has some kind of number assigned to it.

And then...

And we're going to discuss it from the point of view of the effort and the

result, exactly what we went through just now.

And then we're going to discuss a swing analysis.

So we're going to look at the current swing, so let's say swing number three,

and we're going to discuss, well, relative to this swing, the previous

the downside, what characteristics we see, and then the previous counter

like this one right here. So we're basically going to compare a swing to a

swing. We also will talk about the market behavioral analysis, and that is

behavior between strong and weak hands. We're going to try to define for each

type of the market participant, what are they doing at that spot?

And that will create a better understanding for you as to what is

right now.

And then obviously we need final deductions.

or rather inductions.

Those are going to be on the bias, on the timing, and on the character.

And we'll talk about this more as we go through this exercise.

But for now, I want you to do two things.

We still have maybe half an hour to go.

So I want you to, for a couple of minutes, maybe two or three minutes, and

mute myself, and I'll go grab some tea.

I want you to look at this chart and to analyze the first maybe

three swings.

And we'll talk about this and hopefully we'll be able to cover even more today

in this 30 minutes.

But if not, then let's just concentrate on the swing number one, swing number

two, and swing number three.

And secondly, I want you to say yes if you would like to volunteer

and to go.

with me through this analysis.

Thirdly, for the homework, this is the type of the

structure, analytical structure that I want you to have.

And I want you, as you analyze, and the homework is going to be to analyze the

rest.

I want you to analyze all of the bars and all of the swings. You don't have to

do it.

all at the same time. You could do this at your own pace.

I don't know where exactly we're going to stop today. I don't know where we're

going to stop next week.

So therefore, just go at your own pace and then compare your analysis to the

analysis that's going to be presented in the class.

And we'll kind of see how that is going to develop.

All right, so for now, two minutes break for me, two break.

Meanwhile... I want you to think about the analysis of the first three to five

swings and the analysis of the bars that are being mentioned.

And also say yes if you'd like to volunteer.

And we'll go from there. Thank you, guys.

All right, guys, volunteers, maybe someone new.

And obviously, I'm here to help, so we're going to go through this together.

Okay, one, two, all right.

Okay, Nilesh, how are you doing today?

I'm doing good. How are you?

Good, good, good. Yeah, I just feel like my throat hurts a little bit.

I had to stop at many spots, guys, today, so I apologize for that.

All right, so let's start our analysis, and let's start with bar number one,

right here.

This seems like a conclusion of SWIN number one, and let's kind of discuss

this bar a little bit.

What do we see behind this bar for the result and for the effort?

So the volume is slightly up compared to the earlier close.

So the effort has increased.

So slightly increased, I would agree. So there's not like a huge effort, right?

Because we're seeing it at Barnabas 1 as the conclusion of the swing to the

downside, right?

But there is not a lot of increase. There is some increase in the volume

signature that suggests What?

Demand is up slightly, and supply is also,

I would say, still present.

Yeah, supply probably is still present.

It could be increasing at the same time. I mean, this is such a bad reference

for us on the volume signature, but you're right. It's at the highest point

the volume here.

We see it here, we see it here, we see it here, slightly here. So it's one of

the highest increases.

But relative to what we see afterwards, of course, this is just not relevant

that much. So what do you think is dominating as an effort, supply or

I think demand is...

slightly dominating, just going by the close of this candle.

Yeah, I think so too. Going by the close, this is usually, it's going to be

defining factor for dominating effort.

So it closes exactly on the close of the previous bar.

But the fact that it traveled up so much, you know, and closed out of

kind of like a spring type of situation, right?

where we might be thinking that this is just a trading range right here, and

then the price goes below, and then it recovers on the same day. So it's a

spring type of action.

So that suggests, yes, that demand dominates over supply.

Okay, so what about the result?

what is the most kind of like obvious result thing that we see? And I don't

think that for this particular bar, we're going to go into a lot of the

but still, you mentioned the close, right?

The close to the spread is in the upper part, so that's bullish.

That's increasing.

Close to close, kind of the same. The intention, what was the intention for

bar? What do you think?

To stop the downward movement. Okay, yes. And also overcoming some kind

of commitment level. Where is the commitment level for us?

The close of earlier candle, maybe?

Just all of these bars that are touching this line, right? The support line. So

support line acts as that commitment line for us, and we're closing above

So the intention was to go up and to close above the commitment line, which

acted as a support, and we did exactly that. So yes, bullish.

And it seems that we could say that the effort

to the upside increased slightly, and then the result to the upside

also increased.

Bullish or bearish?

Bullish. Bullish. So short -term bullish.

And we could expect some kind of rally out of this.

Okay. Well, the rally happens. It goes into bar number two. And this is where

the whole story starts to unfold for

this area. So let's think about bar number two analysis.

Okay.

So what is happening with effort?

Increased by a huge margin as compared to the earlier ones. Okay, so effort is

increased a lot. Volume is increased a lot.

Demand, is demand increasing?

I would say yes, but the supply too is increased.

Okay, so demand has increased.

What is the dominating force?

Demand. Yeah, demand still dominates the supply because the price has moved up,

closed up.

Okay, great.

And then what did you say about the supply? Is supply going up or down?

Up. Up.

More than demand?

No, not more than demand. Not more than demand, but it's going up.

So basically we have volume increase, volume spike,

with the supply increase, I'm sorry, with the demand increase, because demand

still dominant, and with the supply increase as well, but it's not as

as the demand.

But this emergence of the supply suggests that institutions are doing

Institutions are selling.

Why? Well, because we see two things, what happens. In hindsight,

we see that the price went down.

So they're definitely selling into the strength of weak hands.

And then what would be the second most important?

identification that supplies of institutional quality?

And that's the question for everyone.

I think the signature is too large to be public.

Yeah, we know that. We know that there is an institutional volume signature,

right? We're just trying to define institutions are selling on this bar or

buying.

And by institutions, I obviously mean strong hands.

What about, let's go further through the list. What about the spread, the

result? Now let's discuss the result.

Spread has gone up.

Okay, so spread has increased tremendously. Okay, so close relative to

spread.

Is bullish.

Bullish, because we are closing on the spread in the...

upper part of the whole spread okay close to close

so from this close to this close

bullish as well yes absolutely

yeah nothing to think about here because we are just from close to close we're

traveling the biggest distance than anything that we've seen before right so

close to close

Close to close and so on and so forth.

Okay, what about the intention?

Intention was to overcome the resistance,

but I think it kind of failed because such a huge increase in volume, but it

could not overcome the earlier resistance.

Oh my gosh, yeah.

That's exactly where we want to go with this.

Look at this resistance level.

And look at the bar in question. Huge effort.

Think about all of this buying power behind this bar.

And yet, if the intention was to overcome the level of the resistance

created by these two highs right here, where do we close? Because we're

closing below that level.

We just touch that level and then close below it. What does that suggest?

Institutions are selling, probably.

Yeah,

most likely as the price goes into that resistance level, institutions are

selling into the strength of weak hands.

And that's what's producing that stopping action before that resistance

pushes the close below that level of the resistance.

So now we know that institutions are selling and the intention was not

fulfilled. So even though spread is increasing, close to spread is bullish,

close to close is bullish, but because of the intention and how it has failed

to materialize, we are going to say that the result is actually diminishing.

effort result signature is going to look like this up effort is increasing

a lot and then up result is actually failing diminishing

so how would we interpret this as a bullish short term or is it bearish

term bearish bearish yeah so what's happening here

is lots of effort to put the price above the commitment level, and

yet we cannot do this despite of all of the bullish characteristics of the

spread. So therefore, we would be thinking that institutions are selling.

And Philip is asking, we always care about the intentions of the CEO or the

hands also.

Yeah, we care about different...

strong and weak hands, right? So we want to understand where all of these market

participants are going to come in into the market and how they're going to

behave. So from this perspective, Barnabas, too, we would be thinking that

professionals are probably doing mean reversion trade, right?

CEO is not participating at this point.

And then ITFs are not participating in active.

And public, Nilesh, what do you think public is doing here?

I think they are participating, they are buying.

Yeah, they are buyers, exactly.

So they are on this particular bar.

Okay, so the next thing that happens is bar number three.

And bar number three acts as a confirmation for the selling pressure

come on bar number two.

Why is that, Nilesh?

Because it opened and closed, I think, below the

earlier close.

Okay, so close and then open. Right away we see some kind of gap.

So that's bearish by itself.

Okay. But more importantly, and Doug is asking here, isn't it too early to make

that judgment about bar number two?

Wouldn't we just have to wait for the next bar?

And usually on a bar like this, Doug would be extremely accurate in stating

this, because we would be thinking that this is some kind of momentum type of

bar, and usually...

that momentum bar on that type of volume signature is going to have the increase

of the supply, and therefore we need some kind of retest.

And we want the retest of that type of action to have specific characteristics.

We want the spread, which is the down spread, to diminish.

We want the supply to diminish as well.

And we don't want to see any violation of the open, low,

And we see it right here. So what does that suggest, Naresh?

That violation of the law?

Right. Sorry, I was on mute.

Yeah.

That violation of law suggests that there

is no demand.

Yeah. that the demand that was here on bar number two that is hidden

on this volume spike, it's of poor quality. And we kind of already

there is some institutional selling coming in. Then the next day, there is

continuation.

So that confirms that whatever supply has come on bar number two is of

institutional quality and that we are just continuing with the same bias.

on bar number three there are no more buyers at this point and there are no

sellers bar number two combined both of them the sellers

and the buyers both of the camps and everything was done on bar number two

everybody positions themselves and bar number three is just a test the

resolution bar that just tells us that sellers have won so therefore

as sellers have won now lash where do you think the bars are going to have

stop losses stop loss

i'm going to suggest a couple of places

how about this one right right below this flow right below this flow and then

how about this one right here right below this flow

So what's going to happen when the stop losses are going to

be hit?

So we can

stop, I'm sorry, we can point of entry that bar.

And then we can,

Stop losses.

Two levels.

So when the price is going to go through, that stop loss is going to

market order and it's going to be executed.

And that's going to be a sale.

Therefore, that's going to increase the level of supply and the volume signature

should go up.

So look at the first stop loss level.

We definitely see that the volume has increased.

And look at the...

Bar number five, which is the second level. So this is where the majority of

stop losses were.

And that's why the volume signature increases here on stop losses.

They're becoming the market orders. They've been hit, becoming market

And there is a capitulation by weekends.

So right away, notice what happens afterwards.

Bar number five is that heating up the stop losses and increasing the volume

signature. Now, Lash, what does that suggest for the swing to the downside?

Continuation?

Yes. Okay, but bar number five is also very interesting.

Let's go through bar number five.

The volume definitely has increased.

Do we see an increase in supply just because the first move was to the

Yes. So supply has increased.

Do we see an increase in demand?

I would say yes.

Demand has also increased.

Yeah, absolutely.

What is dominating as an effort?

Still supply is dominating.

Probably supply still is dominating demand at this point of time.

Some demand came in. We see this from the tail, right? So let's quickly go

through the results.

So the spread is what? Maybe it's slightly decreasing

relative to spread number four or maybe the same.

Closed is what?

Closed is bearish.

It closes in the upper part of the spread.

Look at this whole spread.

In the context, yes, it's bullish.

Look at one half, so yes, a bullish spread, so some counter.

Okay, close to close.

Bearish. Bearish, closes below.

Okay, and then the intention was to overcome what?

The support.

Yeah, some kind of support level. So it kind of closes right on the support

level. And if you would take some kind of cluster from this support, from this

resistance, we still have not really closed even into that cluster, right? So

we're going to say no.

So that's on the bullish side.

So a very interesting picture here where there are some bullish characteristics

that fail.

And that is happening on still increased level of the supply and increased

volume signature and increased effort.

So the downward effort has increased a lot, whereas the downward result

has suggested some

buying, but

basically failed as well because the intention was to overcome the point of

commitment, the point of resistance, and it just closed on the level of the

resistance. It didn't really close significantly above that.

So that still suggests a bearish picture.

Am I correct, Naresh?

Yes.

And bearish pictures suggest a continuation.

of a decline, which we do.

And then we go into bar number six.

So let's analyze bar number six.

Volume. What is volume doing?

Volume is up, but not less than still for bar number

five. Yeah, this is an interesting picture because bar number two,

Bar number five and bar number six, all of them have the same intention.

What does that mean?

To get the price down?

To push the price up, right?

Push the price up. Yeah, price up. So the bar number two is the most

successful out of the three.

Again, it doesn't overcome the point of the resistance.

Bar number five is slightly better on the commitment. It's almost there, but

really.

And then, you know, the volume signature goes down. And bar number six

is not really committing above the resistance that we have

there either.

But all three bars have the same intention.

They are trying to push the price up.

Now, for us to understand how demand is functioning on those three bars, I think

we need to talk about the supply first.

So what is happening with the supply signature from bar number two to bar

five to bar number six?

I think supply is decreasing.

Yeah, supply is decreasing.

And supply is decreasing on the way down.

So as supply decreasing on the way down, we also see that some demand is

emerging, right? And we could say that maybe demand is also decreasing in a

But yet, let's look at the progress here that we see. If we would take bar

number five and bar number six and compare them.

So we're comparing number five and comparing number six.

So what could we say about,

let's say, the travel of the price from the low

to the close?

It's above the same, I would say.

So from the low.

to the close, it's somewhat the same.

And yet, so this is the result.

And yet, what do we see on the

effort of the demand?

So we've seen that the demand has diminished from bond number five to

six, right? Do we see that, guys?

We're looking at the volume signature, and we see that the volume is going

So that suggests that both supply and demand are diminishing at the same time.

Supply is still somewhat dominant, but demand is going down as

well, and supply is going down.

So the distance then...

that the bar number five and bar number six travel from the low to the close

happens

on

diminishing effort to the upside.

So the question is, is this rally from the low to the close

on bar number six an easier move to the upside than on bar number five.

Yes.

Do you guys see that? I want some kind of feedback from all of you guys. Just

say something. Yes, I see it. Yes.

So we're talking about the distance from the low of bar

number five to the close and then from the low of bar number six to the close.

We're saying that from the low to the close on both bar number 5 and 6, we

of have this similar result.

Yet there is a subtle difference in the way how the volume behaves.

The volume goes down, which suggests that both supply goes down and demand

down. So now we're thinking like, okay, the same result for bar number 5 and

then bar number 6, and yet it happens on diminishing demand signature.

So it means what?

It means that it's easier to

advance the price.

And if it's easier to advance the price, we would be thinking about maybe like

an ease of movement where demand is diminishing and yet the price is going

Is it bullish -nullish or bearish?

Bullish. It's bullish, at least short term.

And therefore, we could expect some kind of rally out of this spot.

Okay. Well, here's the rally. It's to the point number seven.

And I think that we're going to stop here.

Sure. Thank you so much.

I hear a young boy coughing there on the background.

We definitely love that.

Okay, so we've discussed it up to bar number

six, swing number three.

So what I want you guys to do is to kind of play around with this.

My general assignment here for you is just to go through the whole chart and

just to analyze it, bar by bar, swing by swing.

Again, you don't have to do everything.

Probably in the next class, we're going to stop somewhere here or maybe here.

I don't know exactly where we're going to stop. It all depends on how the class

is going to unfold.

So therefore, just go at your own pace.

Maybe as a point of reference, let's do everything until point number 25, and

that would be fair.

I don't want to overwhelm you as well.

But I want you to analyze, yes, I want you to analyze all of these bars, all of

these swings.

I want you to think about the market behavioral analysis. I want you to

deduct something as to like at bar number nine, what is happening that

concludes,

let's say, this environment and suggest that we're going to go up. I want to

hear your reasoning. I want to understand how your mind thinks on this.

So, and you will be ready, you know, to discuss all of this. And it's just going

to go a little bit faster.

You can use this format. Please do so.

And you could send me, you know, different slides on, let's say,

different slings, and so on and so forth.

But not necessary. You could just show me what you...

in any other different ways that you want to show how you analyze all of the

bars and all of the swings, I would definitely accept that. I'm just giving

maybe an example of how you could do that.

All right, and this is going to be the exercise for the next five sessions or

so.

Again, this is a very important exercise. We didn't have a lot of time

but even those 30 minutes for this exercise, please listen to this again.

Make your notes. Send those to me.

So quite a few homework assignments.

Again, I'm not insisting on everybody going through their homework.

So just do it at your own pace and prioritize. I would say that the

this exercise, obviously.

But if you have time to do the volume and spread exercise, do that as well.

All right, guys.

Good class, a lot of material today.

I'm glad that we are kind of like getting on with this exercise.

Sorry and apologies that I was not feeling that well today.

I think I'm feeling better now by the end of the class, surprisingly.

So I'll see you all next week and, you know, have fun with the homework.

Thank you, guys, and bye -bye.