Original subtitles

Hello, everyone. Today is March 18th, and this is Wyckoff Trading Course. This

is session number 11.

So we don't have a lot of sessions left. We have, what, five sessions left.

Today is going to be the last session on the volume and price. We're going to

finish the exercise today.

And then next time, you know, we'll move into the new material.

Next session that we're going to meet is going to be in a week, March 25th.

Want to talk?

a little bit again about the path, the next steps that you guys could

possibly do.

So I mentioned three steps or even more steps, but the first one is for those of

you who feel like, yeah, there was a lot of knowledge.

And I kind of see this from some of your remarks here that there is definitely

a lot of...

a lot of material that needs still to be observed.

And one of the best ways to do that is just to sign up for the course again.

This time, the summer cycle is going to be just 12 sessions instead of 15.

So for an alumni, just to repeat, I think this is a good deal.

Plus, as I mentioned before,

You know, the regular course for the course is $7 .98 for summer. But alumni

will pay only $4 .98.

And then if before March 20th you

request a rebate, we will rebate you $100.

So that comes to $3 .98.

This is a really good price to repeat the course again and to kind of like,

know, go through the concepts again to observe them better and so on and so

forth.

You would have to go and do the alumni only first and then just ask for a

rebate.

Ask for a rebate.

So that's step number one.

Well, option number one. Rather, option number one.

For those of you who feel comfortable or you're challenged but you're keeping

up, then definitely sign up for the practicum.

Practicum is a class where we still go through some lectured material.

I try to have a lecture each time, maybe for an hour. We answer a lot of

questions from students, and usually questions range from beginners to

levels.

And this particular course is only nine sessions.

And this course is going to start at the end of this, of our current course. So

there's still plenty of time to register.

And the alumni course for that is $3 .98 as well for nine sessions.

And if you register again before March 20th, then you could get a

rebate.

I think that was for those of the alumni. Yeah, I see.

For you guys, you know, for the alumni of the WTC course, this is $598.

Okay, so that's that.

Some comments.

Okay, that's what I was talking about. Sometimes a feeling of being

But then, yes, when you start looking at the charts again with the knowledge

that you already have, you kind of look at the market in a different way. And

that's the purpose of WTC course is just to show you a different

way of thinking and kind of install it in you so that when you look at the

chart, you start looking at the markets in a different way.

I like this one right here.

The exercise is monumental, but becomes more and more manageable with

time. And I think that's very, very important to me.

This is a really good question here. What is the chart telling me every time

look at the chart? So this is a great thing that is happening. So we are

progressing. We are progressing individually. We are progressing as a

All right, so today, as I mentioned, we're going to finish group exercise

one. There is one question or couple.

I don't think that we're going to do any volume case studies.

Today's goal is just to finish the exercise completely, even though we have

many, many slides.

We're going to finish the exercise today.

And the way how we're going to do this is initially I'm going to have just one

person, a volunteer. We're going to go through a couple of trading ranges,

a couple of slides where I want

to establish some kind of interaction between us.

And then after that, I'm just going to analyze the whole exercise for you until

the end.

Homework is going to be still a group exercise. I still want you to watch the

recording and send me your notes.

And thank you for sending those.

All of the notes are great because you're basically studying. You're doing

something rather than just listening to this lecture. So if you could do this,

if you have time, if you have extra time, definitely complete the exercise

complete your notes.

Next session, session number 12 on the 25th, we're going to start with the

comparative and relative analysis. We're going to go through the case study on

Home Depot, and then we're going to have a homework on the relative analysis and

relative and price analysis.

And usually this topic is, you know, someone common or

commonly known among students.

So there is not a big...

revelation that I'm going to give you, but we're definitely going to look at

Wyckoff looked at the comparative analysis, also what tools he used 100

ago, and what are the modern tools that we could use, and this knowledge

is going to, and this material is going to gradually

explore some areas of scanning and filtering.

A week after session number 12, we'll talk about, you know, well, you know,

is it exactly that we're looking for stocks, how we're looking for those

selections and so on and so forth. So that's the plan.

All right. And at this point, I would also say, guys, that if you have any

questions regarding anything, at this point, you could just send me the

questions and say, this is the question for session number 15.

So I'm going to start collecting them, putting them into one Word document.

I would prefer that you send the questions with charts.

If you're going to write a paragraph, a lot of us will be lost in that. But if

you show us on the chart, then we probably most likely will recognize all

concepts right away.

So send me your questions with charts.

All right, great.

And here's a question. So this is probably the preferred format, and even

Word doc, but something like a slide on the PowerPoint where you have the

question itself, where you have your name, and where you have the chart.

So today's question comes from Lee, and this is a little bit off the subject,

but usually this question comes many times over the cycle of

the course.

I'm not going to read the whole question, but basically the question is

about irregular trading hours and non -regular trading hours and how the

is so different during those sections.

The reason why I'm addressing this question is because we're still going

the price and volume analysis. So this is in line.

This is a chart of the S &P in media futures, a five -minute chart.

And as you could see, for those of you who are not familiar with the S &P

trading, or let's say oil trading, currency trading, any type of futures

trading, you're always going to have that type of, you know, where you have

24 -7 or 24 -5 markets.

You're always going to have periods of extreme activity and

then periods of dullness. Nothing is happening.

Well, something is happening there because we're seeing how the price is

creating different swings.

And we also know that there is an Asian session here and there is a European

session.

And then the U .S. session starts. It's usually with the U .S. session

where we see the volume is going to increase significantly.

So in a lot of cases, U .S. session is going to be the most active session.

And then Asian and European session are going to be least active.

So what do we do? Could we conduct some kind of volume and price analysis? Let's

say, you know, how do we conduct it during the U .S. session and how do we

conduct it in between?

So I spent about maybe like five, seven years just trading Forex.

kind of like day -night trading Forex. It was extremely hard, especially living

on the West Coast, to be up the whole night.

So I actually stopped doing that. It just kind of started influencing my

But during the most active sessions,

you're going to have more similar volume signatures.

We could see that in session number one, we're seeing how, first of all, the

volume just increases by itself.

That's number one. Secondly, we have session seasonality that

we could define with the opening.

And the majority of the volume is going to be from 6 .30 Pacific to 9 o 'clock.

So that's 9 .30 to 12

Eastern Time.

So this is where majority of trades are happening in the morning, where a lot of

the trends are being established. As you could see, the lows of the session

are here in the uptrending bias.

So the day traders, when they look at the volume and the price, they're going

keep this in mind, that the lows and the highs are usually being established

during those most active hours, obviously depending on the buys and

so on and so forth. Why are there so many trades right here? Well, first of

when we come back from the night, we have...

a mechanism that we could call discounting of overnight news.

That's number one. Secondly, think about that a lot of the institutional

decisions are being made the prior night after the close of the

previous day, of the previous trading day. And this is where analysis happens.

Analysis happens and then there are some orders.

that are being placed in the morning just based on that analysis by

institutions, and they are being executed.

So if somebody is selling and somebody wants to buy, there is obviously this

between supply and demand, and usually something will win, the supply or

So we could see that on both of these days, supply was present, it was coming

in, and yet demand was capable of absorbing the supply.

you know, in the first hours of the trading sessions, and both days ended

up closing at the, and

this is today's day, by the way, so I didn't have the close correctly here,

at least they're moving up.

So could you really analyze?

the sessions volume, that is the U .S. session volume, was, let's say, Asian

European volume.

I would say probably not. This is not going to be a really good analysis just

because the volume is just incomparable.

But you can definitely compare the volume signatures from one session to

another.

And I would go even further.

I would divide the whole session into three segments, number one, number two,

number three.

Number one, number two, number three. As you could see, number two is just a

lunch time.

So the volume goes down.

Lunch.

And then number three is just the close.

Number one is the open.

And usually the most volatile time is going to be from 6 .30 to 9.

And this is where I would say...

The majority of day traders should reside if they're trading S &P 500.

You literally could do this trade and then go and do something else.

The only times when you probably would just, I mean, if you're a pure day

trader, you always will have maybe like two or three trades before nine o 'clock

and you could be done for the day.

If you are a day trader that has some trades where you are switching from

intraday to daily swings, then you probably will have some kind of

where you're going to hold on to those trades until the end of the session and

have some kind of rules as to whether you're going to keep this position or

you're not going to keep this position.

In terms of the volume comparison and price comparison, definitely compare

apples to apples.

So compare U .S. session to the U .S. session, Asian session to the previous

Asian session, European session to either Asian session because the volume

signature is somewhat similar or to the previous European session as well. And

then use different segments, the session seasonality to compare, you know,

from session to session, and that should be helpful.

Okay, good question usually comes up during the course, so I'm glad that we

addressed this.

All right, now let's jump to the exercise. We have a lot to do here, and

I believe that we're still going to start with the question.

Okay, so I think that we're here.

Can you guys confirm this?

Have we stopped here at 67?

Anyone?

Yeah?

Yeah, I see that.

If Doug is saying yes, then definitely somewhere here.

All right.

And this equation comes from Doug, so that's great. Okay, so within the

structure 40 to 67, there are two substructures,

40 to 58, and then 61 to 67.

So maybe we could put it like this.

Okay. Does the substructure 6167 now in phase B provide potential details

on the likely direction of phase D in the larger structure?

And I think that we kind of finished with that thought, Doc, that we had,

So we said that we are seeing some elements of the spring here, and

we are thinking that this is phase C.

And then from this structure, 61 to 67, we could look at the volume signature,

which is diminishing volume signature. We're seeing that supply is diminishing.

And on this volume background,

what is the price doing? What is the result of this activity? So diminishing

effort to push the price down after this move from 55 to 61.

And yet, what does the price do?

it actually creates higher highs and higher lows.

So on a very rudimentary basic level, when we see this type of price activity

decreasing effort, and it happens that the price comes back into the trading

range, we're probably gonna say that this is bullish.

And therefore, we could expect a swing to the upside.

And with that scenario, we said that we're going to have two things here that

could happen. We could have a scenario of an upthrust, and we could have a

scenario of a major sign of strength, and then a backup.

And therefore, we have different targets for that trade. Target number one,

target number two.

So imagine that we're in this position.

It's around target number one, or maybe in between both of those.

This is where we are going to start questioning, what is supply doing?

Is supply coming in?

And if it's coming in, how does it influence the price?

Is supply being observed, or is supply, you know, has an effect on the

price like we've seen before?

We've seen that at 46 to 49.

We've seen that from 52 to 58, how supply is influencing

these

two areas.

So we want to understand, is it going to happen again?

Could we finally overcome it in such a way that is going to confirm a major

of strength?

But the question here, obviously, has a slight different sub

-question. Or rather, I'm just trying to kind of maybe like, Doc, even not to

give you the answer to this. Maybe that's what's happening, right? Because

we're... Trying to understand the potential details on the likely

the phase C here. I mean, structurally, we understand that should be a major

sign of strength if this is a true C.

But what if it fails?

We don't know. So we still have to see. So how do we actually act in this

environment as traders?

Again, depending on who we are, right? So a long -term investor is

going to do what?

the long -term investor is just going to get into this position.

And that long -term investor might get into the position maybe even on the

spring. So long -term investor might be already one

half into the position

at point number 67.

And where those entries would be, well, The spring itself was interesting.

It had some volume increase, and then it retested really quickly.

So I would say that somewhere on this bar where the test has happened, this

could be the first entry.

And then I would say that second entry could have been on bar number 66,

and the third entry could be on 67. But let's just say that we have two entries.

Swing trader, and obviously the intention here

for the investor is going to be a long -term trade.

The investor is going to look into this and he or she is going to say, I want to

start accumulating this position gradually. And if major sign of strength

going to unfold and it's going to be confirmed, then I want to add to this

position. And as I'm adding to this position, I'm increasing my exposure, my

size. If I'm correct, then the price takes off.

Then that's great. If it fails, then I have to assess as to, you know, should I

get out of this position right away? Should I wait for another point of

Is it going to develop as a distribution instead?

And, you know, I definitely would like to limit my risk if that would be the

case. For the swing trader, because the targets are going to be somewhat short

-term, we just basically want kind of like a much faster entry into the

position. We're seeing a lot of bullish characteristics between 61 and 67, the

way how the price started going up.

And by the way, we have not talked about those breakouts, so this is going to be

the question for...

for a volunteer and by the way let me know who would like to volunteer so say

yes and so that we would have the line there so for the swing trader uh point

entry is going to be faster and faster by faster i mean that we probably at 67

should be completely exposed to the whole position so full size

of a swing position and then our exit

is only going to be either on the upthrust or on the major sign of

We don't necessarily in this situation as a swing trader would want to

overextend our presence in this position.

What if it's going to turn into the upthrust?

What if it's going to look like a major sign of strength, but then it's going to

fail?

A swing trader is going to be trading swings.

And that's what we want to see. So a swing would be this.

A swing would be this, this, this, this,

this, this, and so on and so forth.

So this is our goal.

So for a swing trader, again, either up thrust or a major sign of strength.

Let's look at the second question. As a position trader, should we then also be

evaluating short -term swings for further clarity of long -term trends?

absolutely. And I think that we've been doing that. So if we're a long -term

trader, and I think Adam here at 40 and 41 was talking about how

he as an institutional money manager would be thinking about actually opening

position. And it makes a lot of sense as an institution to be at that place

because we have a lot of liquidity. We have a lot of value at this point.

So if you are okay going through scenarios where a spring is going to

like this and you're still managing the risk and you're not getting out of the

position because you're seeing that this is a spring and not a major sign of

weakness, then you're probably going to be okay.

So yes, we're definitely evaluating the swings as a long -term position trader.

And the majority of our analysis of the long -term trader is most likely going

to happen at the bottom, right? So somewhere here, somewhere here, here,

or this whole area.

And we'd be thinking that these swings, you

know, create a much larger structure for our long -term causality. And that's

what we're looking for.

Okay, so now let's have a

volunteer.

So say yes.

And one of the things that I wanted to talk about first are

these breakouts.

And the question is, and I'm not sure if we've talked about this, guys, but

how does volume behave?

on breakouts.

What is the general rule that we have to follow?

What do you guys think?

Write that down if you want to answer that and we'll start that discussion and

let's go to Rama.

Hi Rama, how are you doing?

Are you there?

Yeah, can you hear me?

Yes. Okay.

Okay, so how would we address this question? For instance, Joe

is saying large volume, large bar on the breakout.

Rama, what do you think about volume behavior on the breakout?

What should we see?

The breakout in price action term represents

overcoming area of resistance.

The area of resistance being an area of concentrated with some sellers.

So if logically analyzing the volume at that stage means

that those who are expecting the stock to break out will

have to absorb

The selling that takes place at the site, the points of resistance.

And that means the volume will increase.

But like you have been stressing in the course, the

secret here is to the point here is to try and find out if the increase in

volume that invariably occurs with every breakout is.

appropriate or excessively high.

And I think that's what I would be looking at when I look at volume at

breakout. Okay, great. I think it's a good starting point for us, and I see

of you also add into this.

The main sentiment here with your answers is that the volume should

and I will agree with you on that.

the volume definitely on the breakout better increase.

Why? Well, because as Rama has said, there are two things. Well, Rama has

mentioned one for sure, but there are two things that we need to be aware of.

So look at 45.

And as we're looking at 45, since the point of the climactic

action here at 40, and this is an outdated chart, so it's...

41 is going to be here.

So looking at this volume signature and looking at the nearest

low right here and just trying to figure out

if the supply is coming on the breakout.

So that was the point that Roma has set.

So some sellers are going to come at this point.

They come back.

Why would they be coming back to this spot? Well, this is the spot where they

shorted again.

This was an increase of the supply.

So there was a general capitulation on this bar, and the sellers remember the

spot. And as the price comes back to it, they are still thinking that the

overall sentiment is to the downside.

So therefore, their first inclination on the bias and the action towards the

bias is going to be to sell.

So they provide the supply.

And then as Rama has said, we just need to see whether that supply is going to

be observed or not.

So now imagine if supply is observed

on the breakout.

Observed, by the way, by who?

by institutional traders or institutions.

So what would that do? This would mean that the demand also would increase.

So we have a situation where both supply is increasing because the sellers are

coming to the same spot and they just want to sell because they still believe

that the price is bearish. And then institutions are coming in and they're

saying, no, it's not bearish.

It's actually bullish at this point.

So we're going to buy this supply and we're going to observe the supply and

we're going to move the price up just because of that.

And as Raman has said, it's very important to observe the volume

the spike.

Like at 52, there is an intent to overcome the

resistance.

and to break out.

And yet, look at the conclusion of that intention.

The price rallies a lot, comes to the resistance point exactly, to the

resistance line exactly, and then stops.

So now we are starting to question, you know, on 45, we had increased volume

signature of the low at 44.

This was the highest volume signature on all of the bars that preceded.

that breakout at 44 so this move up and then we have just a drastic

increase in the volume signature and it closes above so it just tells us that

both supply is coming in but it's being temporarily um observed and we're still

going to have the momentum to the upside at 52

the volume signature increases significantly and we don't have the

don't have that commitment to the upside.

But the process is basically the same.

The supply is being presented and then some institutions or

some other hands are trying to absorb this.

Now the difference between 45 and 52 is that actually there

is more sellers at 52.

institutional sellers than at 45.

And I think that we could logically deduct why.

And I think that there are more sellers at 52 is because at 45,

we just recently had an oversold condition at 40, 41.

And institutions are still seeing the value here, so they are more present on

their run to 46 than they are to 53.

Because they have seen how getting to 46 gets us into a failure to 50.

So they are more willing sellers at 52, 53, 55, you know, than they

were at 46 and 48.

Okay. So, again, let's come back to the question. Volume behavior on the

breakouts. What do we want to see?

Let's approach it from another angle.

In technical analysis, we talk about kind of like fundamental beliefs.

One of those beliefs, one of those basic concepts is that volume

confirms the price.

What does it mean?

Well, usually, well, not usually.

In a lot of cases, I see how people...

misuse this statement.

This statement is basically a bias -based statement

or bias -based assumption.

Why is it bias -based? Because we want to see an increase in volume signature

when price moves.

when it goes up and when it goes down. So when we see a breakout, which is

basically a movement of price, let's say in this case, price is moving up and

closing above resistance.

We want to see a confirmation by the volume that this

breakout has

major institutional participants buying into that breakout

so we want volume to increase which will

confirm that institutions

are buying and

we want this volume signature

to be the highest since

most recent low.

So for instance, let's go through 62, 64, 65, and 67.

Well, rather let's start with 64.

We do have the bar that commits to the upside.

So at 64, we have the result that is positive,

right? That is increasing.

Yet look at the volume signature at 64.

If we would compare that volume signature to everything, and we have to

61 here just because 61 had both increase of the supply and increase of

demand at the same time.

But everything else, every other bar after 61,

what do we see here? We see a specific level of

volume signature where we've seen a lot of buying on these three initial bars.

This one right here, this one right here, and this one right here.

This is where institutions are buying. They were buying on the way down, then

they were buying on the way up.

And they stopped buying.

Why do we say that they stopped buying? Because 62 and 63 produced the reaction

where there was no institutional buying. We don't see their volume signature.

So now, as the price commits above, we want to see

that institutions are coming back into a buying mode.

So, Rama, with all of this logic,

Now, looking at 64 and specifically looking at the volume signature and

comparing that volume signature to all of the up bars that we've had after bar

number 61, could we say that institutions are actively participating

breakout on bar number 64?

Yeah, I would say so.

But the volume signature went down.

Look at where they bought before.

Okay. Look at this. Look at this. Look at this.

And then if we're taking this as our highest volume signature here, this is

where institutions just bought in, then are they participating more or are they

participating less on 64?

It looks as if they're participating a little bit less.

Whereas the only thing that goes against that conclusion is that in 64, the

demand tail, again, shows that there's a

significant... Let me rephrase that question.

Yeah. Are institutional buying much stronger at 64 or off

the low at 61?

At 64, it's, I would say, comparatively low.

Yeah. I think that we all should recognize this, right? So if volume

goes down, this means automatically that institutional buy -in is less.

Right.

Yeah, there might be some institutional buying at 63, I would say, not even at

64. Why 63? Because it provides some value, and we see that 63 has this more

or less increased volume signature.

So yeah, they are buying there at 63, but they are not continuing that buying

64. So it seems like the value zone is somewhere here between 59 and 63.

So when we see something like this, guys,

And this is very important.

When we see a bar like 64, where we have a commitment to the upside and result

is increasing intention, has been satisfied.

But we're also seeing how the volume signature has diminished.

This is not necessarily a volume confirmation of the price.

And it means that institutions are participating less in the breakout.

We want to find the breakout.

the one that would confirm that institutions are buying into that

well.

Because think about the breakout that is going to be a false breakout.

That's going to look like a good breakout because the price commits, but

volume does not confirm.

And if institutions are not participating in this breakout, what's

happen? It's going to become an upside, right? Or it's going to become a

reaction. And we see that at 64.

All right, well, now let's look at 65, Rama.

So the next breakout, we have to overcome the high of 64 because this

the new commitment line. So it's 65.

Do we have the same participation as at

61 to 62, or is it less?

The volume signature at 65 is almost equal

to the volume signatures around, I think it is 62.

Okay, so the volume signature at 65 is almost the same as the volume signature

of the last bar at 62.

What about the bars before?

I mean, when we look at this whole thing, we're probably looking...

at this bar right here as the first bar that is like a pure demand bar.

Yeah, sometimes there is some absorption there. Then we have this bar right

here, then we have this bar right here.

It looks like close to that, but still not above this level.

We're still looking for the bar that is gonna...

give us a clear indication that institutions are getting back into this

position. And by getting back, they're producing actually the result that they

need. And that is the commitment above the local resistance on the increased

volume signature.

But something interesting about 65.

65 volume signature is increasing.

So that suggests that there is more institutions that are willing to

participate, and yet we're going into the reaction at 66. By the way, 66,

just on, you know, if we would look at the trading range right here, how would

we label 66?

As a test.

Yes, definitely a test. We have multiple tests here. One, two, three.

That's the third test would be phase C. Phase C, yeah.

So here is another spot for us to come in into this position if

we're thinking that this whole scenario is bullish.

Okay, so let me clean this up, and then let's go to bar number now 67.

Is this a true or is it a false breakout?

I would say it's a true breaker.

Why?

The looking at the spread as well as the volume

signature and the commitment to a strong commitment I

would say to a level above the local resistance.

So intention has been satisfied and we are committed about the resistance level

that was created by the high of this volume of 65.

Volume. What is volume?

Volume tells us that the demand

is increasing. At the same time, there's some amount of supply.

Okay, yeah, well, each bar will have supply and demand.

Right, right.

Yeah, so the volume signature.

The predominant force is demand.

Demand, yeah, definitely.

And as demand increases, we're thinking that institutions are doing what here?

They're buying.

Yes, they are buying, and they are buying more aggressively.

So if they are buying more aggressively, they push the price above the

resistance level at 65.

And that's how the price commits to the upside.

And this presence, this institutional presence right here, it suggests

that the phase C and the swing up that we have,

is being confirmed at least temporarily for the upswing that we're going to

have. And now we're thinking that, yeah, definitely we're going to look at some

targets right here, target number one.

That would be another upthrust situation as we've had here before.

And maybe target number two, which is going to be a potential major sign of

strength. Target number two.

Okay, so that's basically it on the breakout. So let's make sure that next

time we have some kind of breakout, we want to look at that. By the way, let's

just look at this again really quickly. So let's just say that from this low

right here, we're looking, let's say, at this bar as a potential breakout,

or this two bars as a potential breakout.

The swing here starts here, so definitely the largest volume signature.

If we're looking at this whole trading range and we're seeing how the price

finally commits, this bar kind of like on the resistance level, but the next

commits and definitely the volume is increasing.

And that just confirms that, yes, there is a lot of participation.

Why would the volume increase?

If there is no event and the volume increases multiple days, multiple weeks,

something is happening on the buying side as the price moves up. And who

could create that type of volume signature? Who could move the price like

Obviously not weak hands, strong hands.

So therefore, the volume increase here confirms the breakout.

How about here?

On this bar right here. And I'm using sloping resistance right here, where we

see that the price is committing to the upside. And look at the volume

signature. It increases quite substantially over what? Over the last

we have had.

Since this low, this is the highest volume signature. So the volume breakout

being confirmed here by what the price is doing. And we're thinking that...

Indeed, institutions are participating.

You could take this even to a smaller level. How about a swing like this and

commitment just over this price right here? Well, still volume confirms.

Even though the volume goes down, there is just a suggestion that we're going to

have a reaction right here. But on the breakout level, we're still confirming

from this low to this breakout high.

that the volume expands, there are institutions that are coming in and

and therefore this is not a false breakout, and so on and so forth.

Okay, well, let's look at the trade and what happens next.

All right, so we go to 70, and the way how we want to go about this, Ramay, is

let's address 68, 69 first, and then let's talk about 70.

So imagine we are in a swing trade here. So what happens at 68?

Can you highlight the bar that corresponds to 68?

I can't.

That's the bar.

The volume bar.

This is the volume bar.

Okay.

I think the

certain amount of supply came in as I can see from

the supply tail as well as the volume signature.

So compared to previous bar, You know, the spread

is, I would say, almost equal.

So on bar 68, there's slightly

predominant supply when compared to demand.

Okay. I would agree with that.

Supply is present.

This would be the title for this bar.

And then if we go into our volume equations, we're going to say, okay,

effort kind of stayed the same, slightly decreased. So slightly

decreased or the same on 68 in comparison to the effort

at 67.

And then the result at 68.

and let's just kind of go through this a little bit so you mentioned the spread

so this is 67 the spread is going to be a true range spread because we have

a small gap right here right yeah this is going to be our uh true range uh

um for 67 this is going to be a true range for 68 so we've seen

that the spread is decreasing

We're seeing that the close to a spread has that

supply tail that you mentioned.

Yeah.

So, again, decreasing.

Close to close also does not have a lot of progression, right? So we're going

from one close to the next one. And then this is the progression here of the

close on the bullish bar.

So also diminishing.

And then the intention that was to commit above the

resistance level, which is now is being defined by the high of board number 67.

We did that.

So we're going to say yes.

So what it does is the intention, which just says, yeah, I've committed to the

offside. It still has some kind of bias to the offside building.

So we're still thinking that the rally might continue.

Rally might continue.

But, and this but is going to be all about the result of

the spread and the close. And this looks bearish.

Right. But when we say bearish, we're always going to say short -term bearish.

So we're expecting a reaction.

And this is the reaction that we have from the high of the 68 to about the low

of 67.

And then it comes back, closes up.

So that's what's happening. So it's a natural place for the supply to come

at this level. And look at, again, this bar right here. It just basically

defines where a supply comes in.

And this general capitulation bar.

Look how every time there is something that's going on, let's say,

above the overbought condition of that bar or below the oversold

condition of this bar.

Oversold, up, up, up.

Overbought, down, down.

And now we're kind of close.

to that overbought condition. We're not necessarily there completely, but still,

supply is already coming in.

So what can we say then about the next bar, bar number 69?

Within this story of what we've created just about the bar number 68. So we said

68 supply is coming in. Is supply being observed on that bar?

Definitely. I think by looking at the supply tail and also

looking

at the volume,

it appears to be absorbing the

supply. Well, yes, I would agree with that.

But we want the explanation of why. How could we see that supply has been

observed?

Number one is that the close -to -close analysis shows

that the bar number 69 has closed significantly above the

distance. There is a multiplication of the results. So the result at bar number

69 is increasing.

Okay, so I'm going to write it down. Close to close is increasing. Okay, what

else?

And also close to the spread, it's closing in the higher third of the

spread of the bar. Okay, what else?

How about the spread itself, right? So we looked at this spread, and we're

looking at this spread, right? Right.

So maybe the same. Okay.

So this is a little bit more bullish than

68 in a sense of the close, how the close

behaves. And obviously the intent was to overcome.

The resistance, short -term resistance to close did not close above the high of

the 68.

It wasn't achieved.

So with this failure, we are seeing that maybe we are going to have some kind

of reaction here, short -term.

Right. Reaction comes on the next bar.

But with all of those positive results, it's almost like these two bars are

changing.

how we look at the results. 68 was all about bad close, bad spread, but

good intention.

69 is all about bad short -term intention, but yet the result is

And it's improving on the background of diminishing volume signature. When you

look at the volume signature here, what can we say about the effort?

I think the result has improved on a diminishing

effort. Yeah. So effort has diminished significantly from what we've had before

at 67 and 68.

So effort diminished significantly after the supply

has come. And yet we are producing.

A better short -term result on the close and the spread.

Bullish or bearish?

Short -term bearish.

Short -term bearish is because we didn't have that intention.

Right. But in terms of the confirmation of the bias, we're probably saying yes.

We were expecting some supply to come at this spot.

It did come.

And we've seen on bar number 69 that on a lesser effort,

It's moving out. It could move out. So maybe there's still some supply left.

Maybe there's going to be some kind of short -term reaction.

But the behavior of the price on such diminishing effort is more bullish, and

we could anticipate a continuation of this rally.

Another way to think about this, you could think about the bar number 68.

as the bar that produces the supply and requires absorption

if the original bias to the upside is to be confirmed

again.

And this is the story, guys, that I want you to have in your minds when you go

through a chart like this.

You see bar number 68 and you're saying, okay, supply has come in.

What did we learn in WTC?

Well, we know that...

supply coming in and increasing at this spot does not automatically mean that we

are in the distribution, or at least yet, right?

We just need to see whether there's going to be an absorption of the

supply at this level or that emergence of the supply is going to produce the

synchronicity between that emergence of the supply and how the price reacts to

the downside.

And we don't see that on the 69.

69 acts as a test of the supply that came at 68.

And on diminishing effort, result is somewhat bullish, just

there's no intention there that is being fulfilled right away. So this reminds

me more of an ease of movement where...

Effort decreases significantly, and yet the price goes up and closes more

favorably. So ease of movement and ease of movement suggest a continuation in

the direction of the previous bias.

Okay, well, we dealt with this, 67, 68, 69. Everything is understandable here.

So then what happens at 70?

Well, at 70, the price reaches the critical resistance level.

previously defined by 46, 48, 53, 55.

And it's interesting that there was an enormous effort to

go up and close above that resistance level with

very obvious failure to do so.

And that's the first point that strikes me.

Okay, absolutely.

And the second point that strikes me is the supply tail.

Within a few seconds of looking at it, it's quite obvious that there was

quite a bit of supply came in as the price tried to go above

the resistance and close above the resistance. So the supply met the demand

pushed the price down.

Very interesting bar.

And Nilesh is asking here, selling by professionals for a mean reversion trade

at 70?

Yeah. Well, maybe this is what we could start with, right? So we're seeing that

increase of the supply, as Raman said.

We're seeing that increase of the effort. By the way, if you want to

this effort to anything what we've seen before,

Obviously, we cannot look at this bar because this is just demand overwhelming

supply at this point.

So there is not that much supply.

Contextually, we probably would be looking at 70, how supply comes in here,

we would be comparing it to the previous swings where the price has stopped from

moving up, further up.

So something like that.

And obviously, we want to use the local range, but you could go even further to

the left.

and just to try to identify those type of different areas.

But looking at, let's say, and again, 40 is also we cannot use because there is

a lot of demand right here.

So looking at the volume signature that has some kind of contextually

analogous behaviors, and let me ask you this question, Rama.

What would be those compared to bar number 70?

What other bars would we use as analog bars on the contextual level

where we would say that they look the same in the sense of where they happen

the structure, and then we could analyze them by the behavior of the volume and

the spread?

My first choice would be bar number 52, and also the second choice would be 54.

even though the spread is somewhat narrower.

Probably 55, 56.

I'm sorry.

52 and... Hold on. What did you say? 52 and what was the second one?

I was looking at 54, but... Oh, I see. 54. Okay, got it, got it. But look at

that.

52 and then between 52 and 54, 53 happens as a change of character. We've

about that.

We don't have that change of character bar yet.

Right. We are just in this analog where the price goes to the resistance and

stops. So 52 would be the most appropriate.

Yes. But there is also 45 and 46 that we could combine together.

And when I say analog, and especially, guys, when I talk about contextual

analogs, Why are these three bars are contextual analogs? What is

so similar about them? Let's define that.

Rama, let's just... The first point I would say is that

in terms of price structure, they are at a very similar

point. In fact, at the same point, at the price structural analysis point of

view,

And so the price structure, that's number

one. Okay, so we are at the same resistance level.

The intent is the same, to basically go beyond this price level

that we, for three times, we tried to overcome.

Right. Okay, what else is analogous?

And also looking at the result, what happened when these bars, the

analog bars, reached those price structure at the resistance

level. And again, looking at bar 46, for

example, one could see the supply coming in in the form of the supply tail.

The result is another point at which these bars can be compared.

The result they provoked is an increase in supply,

which took place at these points.

Okay, well, we want to acknowledge that the

intention is going to be the same.

Right. We want to acknowledge that the price behavior

where we see somewhat of the climactic run

into those areas is going to be the same. We want to acknowledge

the increase of the supply of its own, right? So increase of effort

to the downside.

increase of supply increase of volume signature so now that we've established

that these are the analogous bars these are the analogous price volume actions

if we were to compare all three so let's say

one two and three so let's talk about

effort

on the third rally, on the third analog, in comparison to either the

second one or the first one. Yeah, doesn't really matter.

The maximum effort out of the three would go to the third one, the E3

you have marked.

Yeah, so the effort has increased tremendously.

Okay, so now let's think about this.

We're looking at the result, obviously, to the upside, because with this

increase of effort, are we overcoming the resistance? If we are not overcoming

the resistance, how does the price react?

Okay. What is the result in the third case?

The result is that the intention to close above the resistance level has

And look how this intention is being even shown

to us on a different level. If I would take all of the closes, the previous two

closes, and I would say, this is close number one, this is close

number two, we can't even close above the first level.

of resistance that we have at 46.

Right. So result is to the upside is more or less?

It's the results to the upside is very poor.

Yeah. So it's less.

Yeah. So this is what we have. We have the tremendous increase in effort to

the price up to commit

They close above the resistance, and yet the result to upside is even less

than in the first case and obviously than in the second case.

Bullish or bearish?

Bearish. Bearish.

Yeah.

And we know that supply has increased, so there is some. Yeah. And by the

signature, because the volume signature has increased so much, we're thinking

that institutions are doing what at this point?

Yeah.

Raman, what institutions are doing at this point, do you think, on this bar?

Selling. Yeah, they're probably selling.

So Nilesh has brought in the idea of the mean reversion trade by professionals,

yeah, and they could be selling here as well.

Professionals could be taking some profit if they were in some kind of

trade here off the low at 61 where they bought.

could just be taking profits at this point. They don't

necessarily want to commit to a long -term position right away. They might

diminish their size, and that's how the swing will develop, right? So they still

could be in the position, but some of it is going to be gone.

just on this action. They want to protect their profits and stabilize the

equity line.

Because if they don't and they go into the reaction, they are facing two

problems.

First of all, they don't know if, let's say, a reaction happens at this point

and the price goes into mid -range, they will be unclear as to the long -term

bias. That's number one.

And secondly, as I mentioned, the equity line, right? So it goes down, and we're

still not out of the trading range. We have not confirmed the emergence of the

uptrend at this point. So they might be selling, and that's how this whole thing

with the trading range unfolds.

Okay, so the whole picture here is more about,

well, a lot of effort.

that is coming in and we don't produce result as

much upside result as we had in case number one and case number two.

Could we be thinking about then what should happen next just based on this

that we've created?

Yeah, sure.

I mean, logically speaking,

based on this bearish scenario, the next point to look for is the... But it's

not just bearish, Rama. It's not just bearish.

It's more bearish. So what should happen next?

Is to see if there would be emergence of timing element that would give us an

idea that the swing is going to turn downwards.

Okay. Yeah.

Okay, yeah, so a couple of thoughts here that we could kind of extract from this

analysis. We are definitely thinking that short -term bearish, so we either

to see an absorption of the supply at this level, or we need to

see maybe a picture like what we've seen at 52, 53, 54, where we've seen a

change of character, and then we see a trading range.

Or maybe there's going to be so much supply that the price is just going to

to go up and then just quickly is going to go down if the supply is going to be

increasing tremendously and if the price is going to follow that.

So that's how we're thinking about analogs. We want to find the same

equal contextual spots.

We want to find the same bars that are going to have the same intent.

In this case, it's overcoming the resistance.

We want to compare on those analog bars the effort and the result.

And we want to make a judgment as to, in this case, in the current case, are we

more bearish than at the previous analogs, or are we less bearish?

And that would... give us an indication whether we should hold on to the

position or whether we should sell the position.

Rama, what about our swing trade?

Is this the bar where we would be exiting it?

I certainly would, because like you pointed out, the

scenario compared to E1, E2, E3 is very bearish,

more bearish.

So if I'm a swing trader, I would exit at this point. Yeah, you've got to be

quick.

Yeah. I mean, you could still scale out even with the swing trade. You could

say, like, I'm going to exit here at the close, three -fourths of my position,

and I'm just going to leave 25 basis points for this trade.

And then if the price is going to come back, let's say, to around 70, I'm

probably going to sell the rest.

and just be done with this trade because I don't understand why such a big

volume signature comes in.

I don't understand how the price reacts if we're thinking about the bullish

scenario. So it's contradicting our bullish bias at this point in the way

supply comes in.

I mean, would we be having something like this with the major sign of

We probably would, we could have a scenario where, let's say on a more

horizontal line right here, we could have this.

So this could be comparable to a certain degree.

But at the same time, also don't forget that there is a downslope here and the

price actually committed to the upside. But let's say that.

we have the same type of a scenario.

Well, think about even these two bars, right? So analog bars as well attempt to

overcome a point of the resistance. And what happens in the first case

is that the effort is smaller.

In the second case, the effort is larger.

And then we're seeing even just based on the close relative to the spread we're

closing, it looks like the spread at 70 is more bearish

than the spread in this first case right there.

And we are not committing above.

So still, it looks more bearish than the breakout analog

right here that we have.

This we should catch.

And this should produce some kind of hesitation in our minds as to what is

on. Like why are we having more bearish price and volume action here?

Does it mean that this is an upthrust and a failed major sign

of strength? Or would we have an instance here where in the next series

bars, we're going to see some absorption of the supply that came in.

Again, for the short -term trader, like a swing trader, we probably don't want

to even go and look at what's going to happen at the point of the resistance

because we hit our first target and supply comes in with a lot of force and

pushes the price down. So we want to...

secure our profits at this point of time, and then maybe just to have a

bit left.

Okay, well, let's see what happens next.

Raman, what do you think is happening on bar number 31?

I'm sorry, 71.

71?

Yes.

Still,

At this point of resistance, the bar hasn't

committed to staying above, and there is a huge, enormous

increase in volume.

By far, I would say the highest volume in the chart.

On that kind of volume, the bar has

closed.

lower than the previous close and also compared to the spread the

close is in the lower half of the spread and in

addition to that of course there must have been some

buying because the demand tail kind of indicates

that

Some of the buying might have been the

reason for the enormous increase in volume, but

the dominating force, I would say, is selling.

The sellers dominate this part. What I'm hearing from you is that from the up

buyers that we have had, you just said that the dominant force, it

seems like, it's supply, it's becoming more of the supply rather than the

demand. And we see that first at 70 supply comes in and then at 71 supply

in even more and produces a more favorable to the downside result.

We probably would be thinking and comparing this bar by the volume

with the bar that we had in the uptrend right here. And look how differently

they look if so much effort almost equal effort on both on on the both

bars and yet uh in first case a much favorable result and we know that supply

is increasing already here well supply is not just increasing here supply is

producing a much more bearish result than we see you know just comparing

those two How about we would compare this bar, 71, with

maybe another bar?

What would be the analogous bar to 71?

Would be the one, I don't see any numbers on that, but the one

at the extreme left of the chart.

Yes, yeah, yeah, yeah.

And even though the volume, signature is not as large as the 71 it was

the largest volume signature at that time so right by the analog you're

okay so what does this bar represent in Wyckoff terms

in Wyckoff terms it represents

the

Think about what has been and what hasn't come.

It's the bar that follows the buying climax.

So it would be automatic reaction.

How else do we call that first biggest reaction in the uptrend?

Automatic reaction.

Or change of character.

Yes. Okay. Right.

Change of character.

Is 71 a change of character?

Definitely, yeah. Why is this a change of character?

The change of character by

definition indicates...

the predominance of the supply but in this particular instance and

like we discussed just now that

the volume signature and the spread and the close

and the comparison of the close to the spread think about the change of

character literally change

of characters. So it was one character, and now we have a

different character.

From a bullish scenario, this indicates

that from a bullish scenario, changing over to a

bearish... Not necessarily.

Not necessarily.

And see, you're just being caught up in this a little bit.

A change of character means that the change of environment, market

what we call basically not necessarily a bias, but either market

environment or the price environment as a consolidation or as a trending

environment. And then in the trending environment, we could have an uptrend

a downtrend.

So we would be thinking here, in first case, that With the change of character,

we're going into a trading range.

Right. So here, the change of character at 71 is being defined by the result

itself and by the volume signature, which is so big.

So what is the result? Well, the result is more than anything that we've seen

before on the reactions since 71.

And that's a change of character.

the downswing is the largest in that reaction.

And that's what I was asking, you know, why is there a change of character,

right? So we look at the price, we look at the volume, and that defines that

there is a change of character, change of behavior, change of character.

And we're thinking that this change of character might lead to a trading

range. I've asked you what other analog bars to 71 we could have.

I think this was a good call on that previous, let's just call this zero bar.

But there are others. What other analog bars do you guys think we could include

here? Could we just look at the most recent trading range? Let's not look at

whole chart here.

What about the most recent trading range? Can you find analog bars?

you know in that trading range since 40 the

47

okay yeah

anything else and I

would say 53 yes

why the analog bars for 71?

Again, the price action that follows it

essentially indicates that the change of character has produced a trading range.

Okay, yeah.

So let's just kind of stay there.

It's a change of character bars for what? For the trading ranges. For the

trading ranges that we have here.

So again, we are...

Thinking that maybe we're going to go into a trading range right here like we

did before.

So therefore, all of our comparisons are going to be against those two areas.

We are not necessarily going to be thinking about this scenario too much

because it's just a slightly different bias.

We're still in the longer term trading range right here. Here we were

the resistance point and we broke out.

So therefore, we are in the uptrend right here. So it's slightly different

where we are right now. So let's just concentrate on the analogs that we have,

47 and 53.

Okay, so then let's compare 71 to 53.

Effort has increased tremendously.

And the result?

the result is poor.

Can you compare it to 53?

Yes, I would say so.

Okay, so let's just go one by one. So let's look at the result.

Spread.

What can we say about the spread?

Visually, a spread may be slightly...

Larger on 71.

Likely larger. I would agree with that. So equal or larger. Okay.

Close.

Close to the spread.

Close to the spread is poorer,

I would say, on 53 compared to 71.

The close is at a slightly higher level.

So let's just address it in a different way. Which one looks more bearish? Which

one looks more bullish to you?

71 looks more

bearish.

Close to the spread, right? So we are taking one half of the spread in each

case.

And I think 53, yeah, I think looking at it, 53 is more bearish. More

bearish, yeah. So we have that tail, that demand came in and pushed the price

into the close. By the way, for those of you who are not seeing this, look at

the previous close and look at where the price has opened. So there is a gap

here. And if there is a gap, there was some institutional buying overnight.

it's just interesting how 71 on the result looks

more bullish short term than

53.

it just gaps up this one gaps up too but this gap is not that that

big 70 to 71 gap is substantial

It just jumps right into the high of 70. And in the morning, we would be

thinking as swing traders, we would be thinking, hmm, did we correctly exited

three -fourths of our position at 70?

We still have one -fourth.

We have still 25 basis points. So as the price on the intraday level starts

to go down,

That's where we would be on the intraday level, getting out of our swing

position.

Okay.

So effort has increased a lot in comparison to 53.

Result is slightly short -term more bullish, suggesting that we might retest

70 at least. But this is such a

substantial increase in effort.

substantial increase in the supply as well.

So that has some kind of bearish connotation for us. So we are looking

confirmation of this bearish scenario.

So we see that the short term picture is gonna probably lead us to the retest of

the 70 and yet the bearish scenario might be unfolding as we're looking at

Just overall, look at this two bars.

and then compare them with the two or three bars that we have, you know, going

into the resistance before.

What looks more volatile to you?

Definitely the 70 and 71.

Yeah, more volatile.

Right. And we know that volatility is going to increase.

going into more of a distribution rather than an accumulation

at the point of the resistance.

So we're seeing some selling. Okay, well, let's see if that selling is going

be confirmed and if the short -term retest of 70 is going to be a

Okay, next bar, number 72.

Yeah, so we...

Just looked at 71 so 72

Again there is

Continued increase in volume and even with that increase

in volume there is still no commitment above the resistance level

and There's a small supply tail and the spread

compared to bar number 70 has narrowed somewhat.

So result is decreasing.

Right. Okay, so effort increased tremendously.

The highest increase in effort on this chart, the highest volume signature on

this chart, and yet result is mediocre.

we could compare 32 to 70 we see how the spread has diminished we see how

uh yeah there is a progression of the clothes here uh but the intention was to

commit to the upside and we have not done this on such a tremendous effort

that's very bearish yeah so that just suggests that With this

increase of effort, there is a lot of supply that is coming in into the

where demand is trying to increase as well.

And that's why the overall volume signature creates a volume spike.

And this is a very common question through the course, and especially

in this segment of the course.

How do we deal with the volume spikes?

How do we interpret them?

Well, that's how.

We're looking at the bias.

We're looking at the intention behind this bias, and we're looking at whether

this intention has been fulfilled or not.

We also look at the result based on the spread itself.

Is the spread increasing in the direction of the bias?

Is there a progression of the close, from close to close?

Is there a favorable bullish close relative to the spread?

two of those that are going to be okay we're going to be above one half of the

spread on the close we're going to have some progression from one up bar close

to the next up bar close but yet with so much effort

no progress to the upside does that remind you of any other situations

on in this trading range

Or in other words, are there any analog bars that we could be thinking of here?

I think the other points in the price structure

that reminds me of that is the 46, 48, 53, 55.

Those are areas that really exhibit similar type of price behavior.

Look how similar they are.

Obviously, the question here is, why are they so similar?

Well, let me kind of explain this to you maybe in very

common life scenario terms.

Think about yourself.

Think about, let's say, when you go to a gas station to put the gas into your

car.

What are your behaviors?

You're probably going to do the same thing, right? You're going to park your

car. You're going to pay for your gas.

You're going to put the handle into the gas tank, and you're going to start

pumping the gas.

Nothing's going to change that for you. Well, in the way, in trading, a lot

of market participants are conditioned the same way.

We've talked about institutions are taking profits as they get in into the

position because they don't necessarily want to be wrong. That's number one.

They don't want to have an unprofitable position that eats up some of the

profits. They could add later on, so they could sell there.

And this is just if they're getting into the position. Imagine now that...

What if this is a distribution or rather a redistribution?

What would be their behavior then?

They would be selling at the resistance. They would be buying at the support.

And those are the swing trades that they might have there. But predominantly,

it's going to be selling into the strength of weak hands.

And it seems like with these four bars between 70 and 72, that's exactly

what is happening here.

Yeah, I think one observation, if I may, I think these bars between

70 and 72 really illustrate the challenge for students of

this course, because like you pointed out, the bar 72 has some elements,

elements.

But it also has predominantly negative bearish elements.

And it is that weighing up of mixed results is,

at least to me as a student, is the biggest challenge I face every time I

chart like this.

And I think the finer points, the nuances you're highlighting.

is tremendously helpful to me because it resolves the uncertainty that

I encounter as a trader at points like this.

The agonizing question is, what is going to be the next bar on the right edge

of the chart?

And how do I come to a reasonable probability -based decision?

That's exactly... That is so well put.

as to why we're so confused when we look at the charts, and then what is our

final goal with all of this, with this analysis.

In a lot of cases, as we've talked about, looking at a bar

like this, this is where the

confusion's gonna be. This is where the confusion's gonna reside.

Because this bar has a very bullish look.

So when we are not aware of our observations about

the increase in effort, which was so big, and that supply

has been increasing here as well, and the increase of the supply usually would

mean institutional selling here at the spot and would...

Suggest some kind of at least at the minimum reaction.

This logic is not present at more of the beginner's level.

But what Rama has just done with this last paragraph is

he brought in again a level of awareness to the problem that we

have, to the issue that we have when we look at the charts.

They look bullish, but then they reverse.

Then what the heck? What happened?

How is it that we didn't see that the selling has come? Because we know that

institutions cannot sell right away. They need time.

Change does not happen right away. Change is going to happen gradually.

Look at how change happens here between 46 and 48.

Look at the change, how it happens between 52 and 58.

It takes time.

So it seems like something like this.

It's happening again between 70 and 72.

And even a harder task is that in some of the cases when this is going to

happen, we're still going to have a little bit of a bullish bias just

short term, some of the buyers come in and believe that this is going to be the

true breakout.

Now, it doesn't look like this to me at this point just because...

If this is a true breakout, the price has to overcome resistance and then do

something like this, absorb the supply at that level.

And we're still below that resistance.

So all of the possible absorption happens below the resistance, not above.

So here we are overcoming and then absorption happens above the resistance

and then into the trading range.

Next one, above the resistance and then under the support.

Next one, the same thing.

Here, it's under the resistance, so this is very suspicious.

Okay, well, let's continue. Let's imagine that we're probably either out

trade here on the way down, or if we're still in the trade just because of this

demand tail, and still some demand is here. Demand is increasing for sure, so

we're still thinking that maybe there's going to be some kind of attempt to go

up. We're seeing this is more of a bearish scenario.

So therefore, we're thinking if it's going to come here and test, most likely

this will become an upthrust.

Okay, let's see what happens.

Here is bar number 73.

Ooh, what we were on, on the bearish scenario.

Ramam.

Looking at the bar, and the volume signature that goes with that bar.

Now I'll have to revise my thinking because the current evidence

shows that all the volume increases might have been indicative

of absorption taking place below the level of the resistance.

And after the absorption has taken place,

Now we see a breakout with

a very small demand tail,

but the volume signature clearly shows compared to previous bar.

Okay. Let's talk about the breakout.

Let's talk about that, right, because this seems to be the issue here, and

is the most important thing right now.

Let's come back to our breakouts at 64, 65,

and 67. We said that we are waiting for the volume to increase on the

breakout.

Why? Well, because we are looking for institutional buying

to confirm this breakout.

And we have it here at 67.

Is 73 analogous to 67 as to how the volume behaves

relative to the volume that we said, you know, off the low that we're going to

use? So this was the low, so we're not looking at this volume signature. But

everything before that, this was the highest volume signature. So if we would

look at the low here, this is the low at 71.

So we're looking at this volume signature, this volume signature to the

Are we above the highest volume signature?

No.

So are institutions getting into this position?

The volume signature says no, based on volume

signature. There's no confirmation.

Right? Right.

There's still no confirmation. So it seems like if we would be just thinking

that this volume signature here in this area is kind of like a common volume

signature, and we would be looking at this volume, the last volume bar,

as the bar that needs to confirm the

breakout.

We probably would say no.

This breakout is not confirmed yet. We need to see

the volume signature that's going to show us that institutions are rushing in

and they don't mind buying on the breakout.

Why? Because they're afraid that in a short period of time, this point of

is going to become a value point.

So we don't see this rush of buyers coming in. We saw selling

at 70.

We saw selling at 71.

We saw some supply at 72.

And now at 73, what we're seeing here is selling goes down,

the price goes up, but the volume signature is diminishing on the

which basically tells us that when the volume signature diminishes on the

breakout, this is probably weak hands trying to do that breakout.

A false breakout.

A false breakout. Now, let me ask you this question.

If the supply has increased on all of these bars, and

then we see that supply is starting to diminish, What do you think institutions

have accomplished by bar number 73? Have they sold everything that they wanted?

No.

Think about this again. Hold on a second. Let's just think about this.

70, increase of the supply.

71, increase of the supply.

72, increase of the supply. So all of the three bars, they are selling,

selling. And then on 73.

supply goes down. So have they stopped selling or are they selling less?

I would say probably selling less.

Yeah, we see that in the volume signature and therefore in the supply

So it's almost like if they had 100 shares to sell,

they sold maybe like 25 at bar number

70. 25 at bar number 71, and then 50 at bar number 72.

What do they do now?

They probably step aside and sell less.

They do nothing.

They're out of the position.

If they are out of the position,

They are allowing the price to do whatever it wants to do, or rather they

allowing other market participants to do whatever they want to do.

So somebody is pushing the price up on the diminishing volume signature.

So we know those are not strong hands. Those are weaker hands.

Could be still institutional hands, but weaker hands.

So therefore, we're looking at this breakout at 73 when they're thinking

something is not going right.

And they sold before and they don't sell anymore.

So if the price is going to go back into the trading range, what do you think

the volume signature is going to be? What do you think supply signature is

to be?

The supply will remain subdued and

I mean supply will

at the same time the price might re -enter the trading range.

Yes. So we might have a situation where the price comes back into the trading

range and then supply is still going to start diminishing.

Why? Well, because they sold here, they sold here, they sold here. As they sold

their position, they just don't want to do anything. They don't want to buy.

They don't want to sell.

So if supply or effort goes down and the price follows in the

direction of this new bias, which is to the downside, how would we call this

action? A movement on diminution effort.

The ease of movement. Ease of movement. That's what you should anticipate.

Right.

Okay. Well, that's...

a character characteristic.

So we're talking already what kind of character we could possibly have if the

price is going to reverse and come back below the resistance point. How about

another character trait as to how the

reaction might develop?

What about the speed with which the price might go down? What do you think

this speed?

I think the reaction will be fast and furious and very swift.

And like you already have seen the preliminary signs of that in the form of

increased volatility.

And so I would anticipate the reaction to be fast

and swift.

Okay, so think about now the strategies.

So let's say that we're totally out of the position.

as a swing trader and we're thinking um if we are wrong and the price goes up

from here and it becomes a major sign of strength we still will have backing up

action to act on for the next time but if we are right to the downside

the price might actually travel fast and we look at the previous area here 52 58

it was not as much supply that came in as we've seen in this

latest attempt to overcome this resistance.

So more supply would suggest a much more

extended run, much faster, and yet we know that they have sold everything and

there might be an ease of movement initially that we could see. So it kind

reminds me a little bit of the scenario between 52 and 58, where they sold.

Sold, sold,

sold. And then they said, we sold everything.

We sold our position. So after this bar right here, 55, we're not going to do

anything. So what happens with the supply?

Supply goes down, down, and yet the price goes down as well.

and commits to the downside ease of movement so we anticipate in the same

character with which the price might potentially move down just because

behaviors repeat the gas station pumping of the gas into

your car is going to be the same from you know from one uh you know gas

field to another yeah same here and look at all of those analogs 52

is analogous to 70.

53 is analogous to 71.

55 is analogous to 72 and 73.

I'm sorry, 72 is analogous to 54 and 55 is analogous to 73.

So it's almost like the same scenario unfolds. And until it's going to look

same, your goal is going to be just to define the character a little bit

Are we going to have a more bearish move to the downside or not?

But basically, our assumption is going to stay the same, and that is that we're

probably experiencing the same institutional felon, and that might lead

kind of reaction to the downside.

Okay, last question, Rama.

So if we are looking at the

possible reaction,

So let's say that we have a reaction to the downside. Then what about labeling

the whole range? What are we thinking about the whole range here?

Let's put it like this, phase A.

Yeah.

Phase B.

Yeah.

And the extreme right end near the 73 would be C.

Okay, possible C. If this is C, then we are looking at the distributional

scenario. What about an accumulation scenario?

So if we are in an accumulation, then 1773 would be...

In terms of accumulation, that would

be an upthrust.

Yeah.

So these are the two scenarios now that we're looking at.

Distribution, and if this is a distribution, then we are in phase C.

And then accumulation, and if we are in the accumulation, this could be an

upthrust.

If this is a distribution, then what is the next phase and the next Wyckoff

event that we would have here?

If this is a distribution, the next Wyckoff,

phase would be D with the event would be last point of supply, I

should say.

Okay, last point of supply, upthrust, well, upthrust, but then the next

reaction is going to develop where? Where would this reaction go?

It will travel through the trading range as a major sign of weakness.

Okay, great.

So we're going to go into the major sign of weakness.

If this is a bullish scenario and a bigger accumulation, then this reaction

travel where?

If it is a bullish scenario, it will travel from the breakout level

as a major sign of strength.

We know that this is going to be a reaction.

So where are we traveling from 73?

We should go down.

It's a backing up action.

We could get a reaction in the form of a backing up action. Well, we said that

this is an upthrust.

Upthrust and accumulation will happen in which phase?

Upthrust in the accumulation scenario.

Yeah. which phase would it happen?

Phase D.

D will have a major sign of strength. So you are just confusing here, Rama, that

you're thinking that in accumulation scenario, this is the major sign of

strength. Right.

And we just defined that it is not.

Right. It could be either.

this is not the major sign of strength because we're thinking that this is an

upthrust, and if the prices go down, then the upthrust is only going to be in

Phase B.

It's not going to be a major sign of strength. So out of this upthrust in the

accumulation scenario, we're either going to create a last point of support

high -low, or we're going to go into the support cluster.

and we're going to commit to the downside as a spring or a shakeout, and

we're going to come back.

So these are all of the scenarios. Please note that under all of the three

scenarios, whether you are bearish and you're thinking that this is a

distribution, whether you're bullish long -term and you're thinking that,

we're going to go into the LPS or we're going to go into a spring or a shakeout,

under all of those scenarios, the price goes down first.

and therefore gives us an opportunity for a short -term trade to the downside.

Either one, it doesn't really matter.

And that's the beauty of the structural analysis that we have in Wyckoff

methodology, that we could benefit from this type of the scenarios where all of

the scenarios where the bullish or bearish are showing into the same short

direction.

See, that's as a student.

That's another challenge I face, that is being able to keep

an open mind about different potential scenarios.

Like you just said, bullish and bearish scenario when the market hasn't

revealed its hand.

And I find that a very...

That's one of my challenges.

That's great. So we are learning how to think in scenarios.

I don't necessarily want you guys to think always bullish or bearish, right?

Sometimes it's good to have both of the scenarios on paper in your mind and then

seek confirmation to one or another.

We're seeing here in bar number 74 that Same analogous

movement down as in bar 56.

It happens on dimension supply signature. So they sold, they sold, they

they sold.

Now supply is going down.

They sold, they sold, they sold.

They sold again, they sold again.

And now the supply is going down.

So there is an ease of movement on the diminution effort and

commitment below a significant level. So we would have to take both of these

bars right here to see that commitment below this level.

But basically the price action is the same. The volume signature is the same.

The concept is the same, coming to the resistance and then counting, selling,

selling, selling, selling.

They have sold everything, so therefore what would the price do if the supply is

in weak hands? It's just going to start going down, and not necessarily

institutions are going to sell on the way down.

The price can go down by itself with the weight of...

Non -participation by the CEO, by the big smart hands.

Same here.

Sold it, sold it, sold it, sold it again.

And now they are out. They don't need to sell anymore.

And the price just collapses. We said that the ease of movement is going to

produce quick move to the downside.

And this reaction is going to just go fast.

And it does in the first leg to the downside. So that was a correct call.

there is something that's going on right here now. Why is it we are not coming

to a sprint situation?

Why is it that we are not coming into a major sign of weakness situation here?

So this is something that we need to analyze again. And

one of the...

mistakes that I see from somebody in this class who is an engineer.

So you guys have developed a very systematic approach to everything and

like rule -based everything.

But the market is not like this because the behavior of people could change

really quickly.

Something happens and maybe I'm standing at the gas pump and

Let's say my wife calls and she's like, listen, get home really quick. Something

happened. Do you think I'm going to finish my gas?

Probably not, right, if this is so urgent.

I'm going to just stop that and just go home.

And this is obviously a very trivial example here. I just probably have to

up with another analog here. But sometimes what we think would happen.

is not happening and we are being caught up in this cognitive bias of staying in

this position until we either have a big loss or we are stopped out by the

time element or we're totally kind of like seeing that something else is

developing. So I want you guys for a second here, maybe like 30 seconds, to

think what happens here and then write down as to

What do you think? Are we going to try to upthrust here over the resistance and

on that failure we're going to go down?

Or are we going to test this and then break to the upside?

These are the two scenarios. Rama, thank you so much. That was good. Okay.

I'm going to take over. And I would say, Rama, that for you individually,

Just experience, right? So reels, practices, developing the skill of

recognition. So I definitely sense that the knowledge is there, but what I am

seeing is that repetition will bring this to a much better level.

So one of the exercises that I would suggest to you or anybody is pick up any

chart, go past in the history.

Don't even be concerned about the bias that you might know. Like you take

you know what Apple has done. Okay, well, take another stock. Take the stock

that maybe is not so familiar to you. But you still will know the overall

But you will not know each bar, how that's going to develop. You don't know

swing, how it's going to develop. You don't know the character with which

swings are going to take place.

And you can still simulate trading through this exercise.

By the way, one of the things that I encounter, and if there is somebody in

class, I want to call upon you. If you have this type of thinking, simulated

trades do not produce real results, that's really wrong.

Because in any profession, in any craft that you have mastered, and all

of us, have done something in life to compare trading to something else it's

only when we get the knowledge and then start drilling it into a more

unconscious behavior that's when it kind of starts to click so this course

gives you just the knowledge this exercise develops a little bit you know

visual um recognition but you still need to drill this in to the unconscious

level So therefore, Rama, practice, practice, practice.

Knowledge is there. I see it.

And I think, you know, like you said,

I agree with the point about simulation. In most professions, simulation has

been proven to be of immense benefit, whether it's airline industry or

I was about to say, think about those two professions.

And I know that we have pilots, we have medical professionals here

in this group and in other classes as well.

Think about those two professions.

Knowledge is not enough there.

It's the application. And I think the biggest challenge, as I say, is that

the...

ability to weigh up the probabilities when there is a mixed picture like you

presented between bar 71 and 74 and at the same time keeping the mind open

and an even greater challenge I find is that willingness to change my

mind as the evidence emerges imploring me to change my mind.

Yeah, absolutely.

And what I have learned from you in this course is that the nuances of

looking at the inside of a bar using the bar analysis, that is a

giant quantum leap in analysis, chart analysis.

And that's the one thing I find enormously helpful when I practice on a

basis using different charts.

Great. I'm so happy to hear that, and obviously you're welcome, but you don't

even have to thank me. You have to thank yourself for sticking through the

practices, through the homework, through understanding, and so on and so forth.

All right, Rama, thank you.

Thank you.

Okay, so I'm going to give you guys 30 seconds here to think about this

scenario, and then please write it down. What do you think is going to happen

next? Are we going to fail on this attempt to upthrust, to go up, or are we

actually going to break out of this smaller trading range?

30 seconds.

All right.

Let's see what's going to happen here under everything that you wrote. Okay,

fail.

Price moves up and breaks out. Looks like it will drop further. Demand not

strong enough to break resistance. Okay, interesting.

Okay, so only three answers.

That's interesting, too.

All right, let's see what happens.

Let's analyze this. So we said that the...

or rather Rama said that the move is going to be fast.

So we've seen that the first leg to the downside indeed is really fast.

It's an ease of movement.

They have sold everything at this point right here, and they don't have to sell

anything. Weak hands cannot push the price up at 74, 75

or support that price.

But something happens at 76.

76.

has an increased volume signature, which suggests that there is some buying

behind it. We could see this also from the demand tail. The price goes down

quickly and then stops.

We might be thinking here that it's still favorable to us for our short

position. This could be a sign of weakness.

And the next attempt to go up is LPSY. We actually could even increase our

position size right here.

add to the position, add to the short.

But then the next bar, the very one where we would add, let's say on the

intraday basis here, does not have a commitment to the downside.

So this is something that could produce a question in our minds.

Not a big volume signature at all. There is no supply here.

So there is some kind of exhaustion. So we're thinking that after this, without

commitment, we're probably going to have some kind of rally.

The rally that we have actually encourages us to stay in the position.

overcome the point of the resistance.

And then off we go to bar number 77, which is also a very interesting bar.

Why is it interesting? Well, just because of two things. The volume

is the fourth largest or maybe the fifth largest on the whole chart.

If we would be thinking that there are some characteristics of selling on this

bar, we probably would just confirm that. Yet, we are closing above the

So we try to commit and we fail.

Doesn't look like a very better scenario.

With so much effort to the downside, the price should go commit below.

76 level.

And not only that, but progress to the downside.

And we don't see that.

So then off we go to the next bar, which is to the downside.

And we still cannot commit to the downside.

78. We have an increase in effort in the progression of the buys,

and yet the close is above the support.

So look at this, guys.

When was the last time? What was the last bar?

And write this down for me. What was the last bar, let's say,

from 74?

What was the last bar that committed to the downside with the close that

was progressing below the areas of the short -term support that

is created by different bars?

What is the last bar that committed fully to the downside below levels of

support? What do you think?

All right.

Maybe think faster. Write faster.

Okay.

I want more answers.

Think about this.

What is the last bar that has committed to the downside

below the support?

Let me give you an example.

Okay, so let's say from 61, what is the latest bar that commits to the upside?

Well, we see that this was the close, the highest close here.

In this, from 55 to 61, what was the last bar that committed to the downside?

This one right here.

So we're looking at this move to the downside. What is the last bar that was

committing to the downside below the support? So here, above the resistance,

this was the latest resistance. This is the commitment here.

This was the latest support right here. This is the latest commitment.

In this case, okay, let's work on this.

What is the latest support?

Right here was defined by the low of bar number 80.

Do we have any bars that commit below that?

Somebody was saying between bars 80 and 81.

These two, no.

Do they commit below 80, below the support?

No, they don't.

So therefore, there is no commitment here. Okay, what about these bars? Do

commit to the downside between 78 and 80?

Also, no.

Why? Well, because this is the support. This is the latest short -term support.

There is no commitment there. Okay, how about this bar between 77 and 78? Does

it commit to the downside?

Nope.

What about this bar between 76 and 77?

Does it commit below the short -term support that was defined by 76?

No.

So a very interesting picture. On the way down from 55 to 61, we're seeing all

of those commitments.

Okay, so commitment number one, commitment number two, commitment number

maybe commitment number four right here, and the last commitment number five. So

one, two, three, four, five.

Here we're seeing only two commitments, one and two.

Everything else is within the structure of a bar. It almost looks like

an inside price action that keeps happening, and we're seeing maybe some

attempts to overcome,

but no commitment.

Something like this.

It's within this first inside bar that all of the action is defined.

Well, where is that inside bar? Well, here it is, right here.

But you would say like, oh, on the horizontal level, you only have maybe

four, five, six bars that are within this range. Well, you don't have to

so linearly.

You can think.

more dynamically in a way of how the price creates the structure. It's on the

down slope.

So we're seeing that 76, bar number 76, if you take the resistance and the

support, price basically deviates around this down slope and channel.

But it goes nowhere.

And there is such a laborious movement to the downside that is being

defined by this channel.

So there is resistance

to go down.

Bullish or bearish? Bullish. Now let's seek confirmation for this

bullishness.

And as Rama has said, Let's go into the bar analysis, and maybe that will help

us out. We stopped at 78.

We said that, yes, there is some demand behind it. That's what stops the price

from committing below, and that's what brings the close above the support.

79 is a very interesting bar.

Why? Well, because there is an attempt to commit above now.

So, so many attempts to commit above. One, two, three, four, and...

finally five is this a successful attempt no

but it's the best

it's the best up bar that we have had

since 73.

the tail overcomes the resistance so we're starting to think that yeah this

there is some uh Bullish behavior.

Bullish behavior does not mean that we are ready to go up at this point.

Justin is asking, is this a change of character?

Justin, I would say that it's more of a change of behavior rather

than a change of character. So change of behavior could

happen even in phase B.

and would indicate bullish characteristics, but

not readiness to advance.

Advance up.

Change of character would look as a structural completed

change of environment where we're going

let's say in phase D, through the sign of strength in the backing up action,

that concludes the structure of an accumulation.

So accumulation is complete.

And that's the difference between the change of behavior and the change of

character. So this bar 79 is more of a change of behavior rather

than a change of character.

But you are catching this because you're seeing this. You're asking this

question and it's very close.

So I'm glad that you're seeing this. Yes, something else is happening here at

79.

Then look at how the next, and it's probably analogous to 78 because there

this attempt to go up, to go up. Now think about bar number 18.

So this is the 18th.

Effort goes down.

And yet this has become the best bullish bar because we are opening here,

going most likely up first because we

are opening with the gap and then we're closing below.

Then going down. So there is a lot of selling. And here at this point, we're

thinking. Would the price stopped with the close below the support? Because if

it does, we might be in this situation where, you know, we're committing below

finally and price does not come back.

But here the price comes back and it looks so much different than 80. The

is much more and it happens on the diminishing effort.

If effort is diminishing to push the price to the downside, then supply is

diminishing as well. If supply is diminishing, then we're going to have

kind of at least attempt to rally.

And we already saw that from 78 to 79, there is a change of behavior.

So now that the price comes back, it still closes below the open,

but we're seeing that a lot of the gains are being made into the clothes of this

session so this is a completely different bar than 79 because whatever

comes in supply is being absorbed now much faster and then look at the

conclusion of this change of behavior action at 81 effort is increasing

tremendously and then instead of you know whatever supply is coming in and

trying to push the price below 80.

Supply is being observed so fast.

There is really not a lot of supply left.

And then this means that there is a lot of demand behind this volume signature.

And it acts so nicely, comes back into the range, has the most bullish looking

bar, and then goes into the test.

The test has some supply.

Look at this points of supply here on the up bars.

and compare them you know to this latest up bars some supply is there

supply is present okay well if supply is present we

usually want to see two things we want to see either absorption or we

want to see the result to the downside to increase do we see a meaningful

reaction Do we see the increase of the result to the downside?

No, we don't. Do we see elements of absorption? Yes, because the price stays

the same level, actually close to close, goes even up on a high volume

signature, relatively high volume signature locally, and yet the price

go down.

So increase of the supply on the test, no result, means absorption is

underway.

So we're thinking that this is absorption.

And therefore, we could devise any tactics here as,

you know, and they would all be related to some kind of breakout strategy.

What if we have a ball like this?

Then we definitely want to come in on the breakout.

If we are very much convinced right now that this is a bullish scenario, we

could buy the market here and we could put this stop loss just below 80 -81.

Because the meaningful demand has come here.

And if this is indeed a bullish scenario, if the price comes back to

what do you think institutions are going to see? They're going to see some value

in a bullish -driven bias

scenario, and they're going to buy again.

And that will support the price. So you want always to put the stop loss below

the logical spot. The logical spot is only going to be associated with

institutional buying.

All right, well, so either buying here or buying on the breakup.

What could we say about the character with which the price can potentially

from here?

Well, probably...

Gonna have some supply coming in here, here.

There is a bunch of supply right here.

And I think that these sellers here are still kind of looking for blood and

looking to sell. So they're probably, this whole area right here is

just like a danger zone.

So the price probably gonna come

into this area, it's gonna show some bullish buys by committing above, and

it's probably gonna have some kind of reaction.

And the way how we could also judge the character,

how else we could judge the character, so we're seeing that, okay, maybe a

reaction right here.

But what kind of reaction are we gonna have here?

Well, now we could look at some analogs.

And we usually would look at the analog of like bar number 70 and 52.

And let's say 45, 46.

Those are analogs. 47, 53,

71 are analogs. 48, 54, 72

are analogs.

55 and 73 are analogs.

Now I'm going to show you a different technique.

How about looking into this whole area as a trading range where we are

anticipating a move to the upside and comparing it to the previous area of

we also had a move to the upside.

Contextually, they happen at the same place in a large trading range and they

happen at the level of the support.

They have somewhat of the same causality, and they have the same

short -term bias. It's to the upside.

Now, when we look at this, too, we're thinking, if we would only know what

is more bullish, more bearish, and if we could define that, then we could think

and speculate about the extent of the short -term move that's going to come up

right now.

So let's look into the effort and the result for these two structures.

So what could we say about the effort?

Well, we're looking at the supply signature, and I would just take it from

like 66 maybe.

Okay, so from this perspective, our supply is

not that much.

From 76 to the test here, I'd say that probably

we have more supply in general.

So more supply.

What could more supply suggest for the rally?

Well, probably if there is more supply, at this point of time, then the rally is

going to be less bullish than what we've seen

before. Well, how less?

What does it mean, less bullish?

Okay, well, probably, you know, that reaction that we've talked about around

this area, you know, if we come into the reaction, maybe like into this high

right here,

If there is more supply, then the reaction is gonna be more meaningful

we've seen before.

What kind of reactions did we see on the previous move up?

Something like this in the middle. So these are just really not big reactions.

So we probably would just take the largest reaction here and say that it's

be more than this.

So maybe it's gonna come back and just be a little bit more something like this

so more meaningful reaction if this is a meaningful reaction we're probably

going to encounter some supply increase in that and usually supply means a test

a retest of this low so we're probably going to have some kind of like double

bottom here on the reaction

And then out of this formation, then we're probably going to continue to the

upside. But we already said that more supply, we're not really sure about this

rally. And that's what kind of bothers us. If this is the case, you know, we

would be thinking.

originally, you know, even before thinking, you know, in all of these

Could this be a phase C and an LPS trading range?

That was one of the scenarios that we discussed with Rama, right? So the price

does not go and commits below 61.

So it's not a major sign of weakness.

So therefore, distributional scenarios still could be on the way, but we're not

there yet in terms of timing.

It's not a spring or a shakeout.

because we are not creating a lower low.

We are creating a higher low. So only a last point of support in phase

C could be that definition we're thinking about phase C.

Also on the bullish case, there could be an attempt to still be in phase B.

Phase B could be still a scenario for the distribution and could be a scenario

for accumulation.

So again, you gotta be so flexible here with how

you are not being caught up in the cognitive bias of one scenario.

We need a proof.

We need a proof of one scenario over another.

And the only conclusive deductions that we could make are more short -term at

this point than long -term.

So we need to see how the price is going to react to the upside. We need to see

if this reaction is going to develop in the way how we're looking at this. And

even if we do that and if the price goes up, we're still questioning the whole

bias for the whole trading range here.

Why? Well, because we saw from the analog trading

ranges, that this latest trading range from 76 to 81 has more supply in it

if there is more supply then why would we even be thinking long -term bullish

scenario we could be thinking short -term bullish scenario and then give us

clue of what's going to happen we basically need to see what's going to

here again i think that we're we've kind of exercised

our knowledge in such way

with all of this smaller trading ranges that give us a really good indication of

what's going to happen with the swings.

I think we kind of established this. So I'm not worried about the short -term

scenario. I'm more worried about the long -term scenario. So let's just see

happens.

Well, here we go. That reaction that we talked about, going

into this area right here, this is where we... We saw a lot of supply coming in,

so we know that supply is going to come in, and look how it's coming in.

This bar right here, 85,

diminishing spread and increasing effort

suggest presence of the supply.

It's a memory that market has created around this area.

And look at where it is. It's just at the same level. So we are testing the

level of the supply where the institutions come in and start selling.

that at least, yes, there is some selling into bar number 85.

We said that most likely we're not going to have the same smaller reactions that

we had on the previous rally. So this reaction is going to extend itself as

evidence of the supply.

And it extends even more than what we thought it would.

So this definitely needs a retest.

And this retest comes somewhere here.

Is this a good test for us?

I think so. And look at the levels of the supply here on the first reaction.

And look how supply diminishes.

So we would be thinking that there's going to be some kind of continuation

the area of the resistance. And this is our cluster right now.

This is where we would be thinking of getting out of this position if we are

Before we go any further, I want you guys to see how

analogs are confirming each other and

what exactly you could extract from this as an information.

We're seeing an area of causality which

resolves itself into a breakout.

Is this a confirmed breakout?

Yeah, definitely.

This is the low, still has some supply, so we can't use this.

This is the highest volume signature.

This is the highest volume signature here.

So the same analogous price behavior.

It could go even right here. It's going to be the same.

Think about gas station.

How do you gas your car? Are you going to change your routine every time you go

to gas station?

Likely.

It's so unconscious, and we just want to do this really quickly, right? It's a

waste of life to do that.

It's just a necessity.

Behavior is going to be the same. Behavior repeats over and over in this

range, so hopefully I'm convincing you that people in the markets behave the

same way as in life.

They develop one behavior and then they habituate with this behavior and kind of

sticks and stays the same.

So here the same.

There are differences here.

46 looks more like 85.

We're seeing the diminution spread, we're seeing the effort increase, same

And 68 is different because even though effort stays the same, kind of similar

to what we have here, the reaction is not that great.

Like it was at 46.

Or like it was on the first block after 85.

And that's the big difference. That's that small nuance that if we miss that,

might be agonizing as the price goes to 86.

But if we are thorough with our analysis and we see that supply in this

formation is more than in the previous accumulation, then we would be expecting

that the reaction is going to be more. We would be expecting that supply is

going to increase on that reaction.

And as a result, we're going to have a subsequent test of that.

And here it is.

Okay, so we still would be...

In this position, we would move our stop loss to 86, below 86, from below 81.

And this would be a very difficult trade.

I'm not sure if I would be excited about this trade. I'm not sure if I would

stay all the way with this trade.

I might be thinking even here that I'd rather just get out of this trade

it just produces a lot of anxiety in me the way how it behaves, even though I

might be understanding this, but still.

I might scale out a portion of my position, preferably on bar 87.

That is basically by the close is gonna show us that the effort is still high

and yet there is no intent here, there is failure on the intent to overcome the

resistance from 85.

Just leave a little bit.

Okay, so this is what happens next.

Look at bar number 89.

So 89 is actually an extremely good bar for us because it looks

extremely bullish and the effort increasing in the direction

of the bar.

If I would be comparing this bar and I would try to find the analogs, I would

come back to our discussion with Rama where we looked at 70, 52, 46, 45.

There is the same intent in all of these bars to do the

same thing, and that is to overcome the resistance and commit to the upside.

And bar number 80 is very convincing because it's the

highest close in this trading range.

That's number one.

And more importantly, it's the highest close above the analog bars that we see.

So it's more bullish.

Yet we know that we still need to commit about the level of the resistance. Did

we do that on bar number 89?

We still have not done that.

We still have not committed fully above the resistance that

was... the highest resistance at 74.

So it kind of gives us a little bit of a hesitation, and we want to see what's

going to come next.

We know that the momentum is so high that most likely we're going to have a

movement that's going to continue to the upside.

And we're just thinking, okay, well, what is the target? That's number one.

Then what is the character with which it's going to move?

Are we going to see like a...

splash of the supply coming in and then the price is going to react to the

downside or are we going to see some supply coming in at this spot and yet

price is kind of stable so that's going to be very interesting or maybe the

price actually goes up even because the first one is still going to be an up

thrust and the second one finally is going to be that major sign of strength

that we are thinking about

One of the things here as well that we could quickly think about is

another point of resistance where we might take these highs, these highs,

highs, and establish maybe an upslope in resistance,

something like this.

So then the target for us is gonna be target number one as an up thrust,

and then target number two as a major sign of strength,

but we need to have a close above.

That's the plan.

We're still in the swing position. We're feeling now so good after 85, 88.

We might not be fully in that position at this point of time, but whatever we

have remaining actually shows a really, really good momentum to the upside. And

at least short term, we have two targets here of where we might be coming out.

So the main thing is about the character.

How are we going to move there and what kind of character is going to help us to

define some kind of bias.

Okay, let's see what happens next.

Oh boy.

Have you anticipated something like this when you were looking at the previous

bars?

And this is why when they say that the market is basically

an ocean of uncertainty every day,

I would think about the bar like this. I would think about the price

action like this. I would think about the volume action like that.

That's uncertainty.

So many bullish characteristics on bar eight and nine, and then 90 comes in

the largest volume signature on this whole chart.

And then look at the spread of this bar. If we were thinking about the analogs

for this bar, we would be thinking 71, 53, 47.

Well, how would comparison work for bar number 90?

Effort. Well, I don't know even how to describe this.

I'm just going to put this.

Okay, result on bar 90.

And obviously to the downside, right? To the downside.

What is the result?

Largest spread among all of the analogs.

Best closed to the downside with all of the analogs.

Look at all of those tails, demand tails that we have on those change of

character bars. We don't have it here.

And look how demand was rejected, right? Because we closed and then we opened

with a small gap and then initially the price went up and then the rejection,

the full rejection to the downside.

So there is so much supply that is coming in.

And it seems like this is an urgent supply.

And obviously institutional, of institutional quality.

What does that suggest?

Well, first of all, as to the bias, short -term bias, that is definitely to

downside.

Kind of reminds us of all of the analogs that we went through in this area.

Maybe just looking more at the upsloping resistance here. Still acts as an

upthrust as it acted before, as it acted before, as it acted

before.

So upthrust, upthrust, upthrust, upthrust.

But there is also something else. Just see.

The character with which this has happened is just so tremendous to the

downside, both on the result side and on the effort side.

So this just huge increase of the result suggests

a much more bearish reaction.

Okay, well now let's think about Wyckoff structural analysis here. If we are

to have a much more bearish reaction in this structure, where would it go? Well,

it probably would overcome this support at 80 and 81.

And then the next support is gonna be a cluster between 40 and 61.

This is our target one.

target two and then below that is gonna be target three.

So if we're thinking that urgent supply, institutional supply is gonna produce

a much more bearish reaction, most likely target number one is gonna be

really quickly.

Target number two will be tested and most likely just because of how bearish

are here at 90 and 89 in comparison, let's say, to 53 or 55.

Most likely, we're also going to make a lower low here.

So we're going to overextend the bias.

And we extend the move to the downside.

Now let's think about structural analysis.

What does it mean? Low or low?

In the distributional scenario, this would mean a major sign of weakness.

In the accumulation scenario, this would mean either a sprint

or a shakeout.

These are the two scenarios, but look at the possible trade that we could have.

We had a downside trade here.

Our exit is probably gonna be somewhere here on this bar.

This was the trade.

We looked at into this trade right here. Our exit is most likely is gonna be

somewhere here in this area.

If this trade is to develop, this would be the best trade to the downside so

far. So we definitely want to participate.

So in both of the scenarios with the low lay, whether accumulation or

distribution, it's just still, there is a lot of room.

So now it's all about timing.

We talked about the character.

We talked about the target, the structural things, and now the timing.

Well, I think that the timing is just kind of being given to us by how

aggressively increasing effort

is synced with

increasing the result to the downside.

The synchronicity tells us that

The move is going to happen now just because whatever effort is coming in,

it has a lot of

following in the result.

So we don't have to develop a trading range right here like we did in 70 -74,

53 -55, 46 -48.

The price is ready to move right now.

And the way how we would initiate a trade like this is just basically open a

proposition at the close and then also see

on the intraday and attempt to go up. And if it's going to be a small attempt

and then the price is going to go through this level again, this will be a

of entry for us. And we have to be extremely quick and extremely aggressive

add, add, add right at that point because we know that.

The price is ready to go down. That's number one. And there is a substantial

supply that is present and substantial institutional selling that has happened.

There is some kind of urgency to sell by institutions. They might continue that

to the downside.

By the way, guys, overall, the volume signature should increase.

If we're anticipating a reaction like this.

to the downside into the lower low imagine all of the long -term investors

bought in right here right here right here right here what are they going to

as the price goes below they're going to capitulate they're going to say i was

wrong regardless of whether it's accumulation or distribution i mean some

them might not be able to sustain this type of move and they would be looking

for reasons to get out

Okay, so again, we know that we would have the probe right away. We know that

the point of entry could be on the intraday level if it's going to give it

like this.

So let's just see what happens next.

Here we go.

Quick move to the downside. Still, there is a lot of institutional selling even

on the way down.

So we would try to...

well we got in on the at the close then the next open is going to be with the

gap attempt to go up let's just do the intraday a little bit better so

previous close this is closed at 90.

opens with the gap and then small attempt to go up and then

just going through and closing slightly higher Okay, so where are our points of

entry here on the intraday? These are the levels that are going to be

to us. Open and close.

So here is one point of entry.

Here is another point of entry.

Please note that those points of entry are confirming.

They are in the direction of the move to the downside.

And they are going...

after attempting to go up, we are getting in on the failure. We're getting

the movement in the direction of the buy. Yeah, there might be some slippage

here for sure, but the fact that it was trying to go up is probably telling you

that there are some buyers there, so you still should be okay shorting this.

And a quick move and we go below 61.

All right, guys.

This is where we're gonna stop today. So obviously we have not finished the

exercise. But what I want you to do is your homework, listen to the recording,

make notes, send those to me. And also the second homework is to

look at where we are right now and define

Where we are in the structure, are we in the distribution or are we in the

accumulation? What are your arguments for that?

And then also think about the position, the short position that we have. Are we

still keeping that or are we out?

Are we scaling out or are we adding to the position?

So just all of the common questions that we usually address in our analysis.

So and that would be the homework. And then in the next class.

I'm just going to kind of like do this by myself and finish really quick

we need to go to another material. But, you know, there is still quite a few

slides there.

I just need to go really, really fast.

All right, guys, that's it for today. Good class. Rama, thank you again. Thank

you, everybody, for participating.

And I'll see you next week on the 25th. Thank you, guys, and bye -bye.