Original subtitles

So Rewind today is October 8th. This is our first session of

the tape reading special and series number one. So we've got quite a

lot of things to cover. I'm extremely excited about this course. It took me

literally years, you know, to say to myself and to our

students that now I'm comfortable, you know.

present this material in the way how I want to present this material in a very

systematic way in a very detailed way and also obviously I wanted to invite

specialist people who been doing tape reading for years and who I consider you

know one of the best in the world and obviously you know we know who they are

and you know some new introductions are going to be made So it's going to be an

exciting three months. It's going to be an exciting ten sessions.

So what are we going to cover?

I'm going to go really quickly through this because you guys already know.

You've seen this on the website.

So we're going to start with the foundational principles.

In the next three sessions, we're going to discuss basic to intermediate

concepts. Specifically, we're going to focus on bar -by -bar analysis.

That's kind of like bread and butter.

of tape reading we're going to concentrate also on swing analysis that

allow us to understand the strength and the weakness of the price structure we

also will be doing a lot of contextualization of our tape reading

within the wake of price structural analysis as well and on the top of that

know we'll quickly revisit what the law of supply and demand is then effort

versus result effort versus result being the main law for us and then point and

figure in volume tape reading and then horizontal uh volume and price tape

reading we're gonna do a lot of drills and exercises even today we're gonna

three exercises and you're gonna have a homework and i'm not even sure if we're

gonna be able

to cover all of the material today so you might actually have more homework by

the way how's my audio guys is can you hear me if you can't hear me then you

know just log off login back

all

right so what are we gonna do next uh well for those of you who are attending

series number one or you signed up for the whole program already you will

receive a bonus session it's actually going to be live and that is with our

adjunct professor uh gary fullett uh and gary uh volunteered

a free session for us on october 29th from 3 to 5 p .m pacific and he's going

be talking and i highly suspect that this is also going to be about the pnf

volume

tape reading as he's trying to tape read without any time frame constraints and

we know that it's only the pnf chart that is going to give you that type of

no uh time references series number two well this is something very special this

is something that i want you all to be a part of david weiss is going to join us

for the tape reading course also for three sessions

We are going to have him for an hour and a half. There are some limitations that

David has that we have to honor.

And we're going to study it together with David.

I'm going to go with him through intermediate to advanced tape reading

And we're going to start with the original work by R .D. Weich. We're

show you such an amazing couple of charts where the P and F is being

with the volume, but not in the way how you would think about it.

Then we're going to go through some of the explanations, and specifically he

will talk about his wise wave indicator and his cumulative wave.

So we'll put on some charts, because we're going to look at some of the

there.

He's going to tell us how to interpret those and what kind of deductions we

could make out of that tape reading.

swing by swing analysis and bar by bar analysis is always going to be a part of

that type of work and as always we're going to have exercises and drills for

and homework now there is something very exciting about this particular series

because now i'm teaching with somebody so this series number one i'm teaching

myself the basics you know i just want to establish a really good foundation

us moving forward but together with david it will give us an opportunity to

actually showcase some of the tape reading techniques and chart reading

techniques. So I'm going to become a student of David, and David is going to

give me a chart that I have no idea what that chart is going to be.

And then I will try to tape read, chart read, and decipher what kind of bias,

diamond, and put on some of the trades. So we'll see how that's going to go.

That's very exciting.

Series number three.

I'm introducing to our community a new face, a new name, William Riordan.

This is a talented tape reader who is residing in the UK.

I had to connect with him, you know, just finding him on Twitter and then

on connected with him and kind of went through a couple of sessions of

exercises just to make sure.

that the level of what i've seen on twitter corresponds to the level you

that could be taught and yes indeed you know it's uh it's there so i was really

you know pleased because you know i've been on the mission uh this year to find

the best tape readers in the world um not the ones that are traders but the

that are teachers the ones that who could actually systematically teach us

to correctly apply these techniques And William is definitely one of them. What

are we going to cover?

Some intermediate to advanced tape reading techniques.

Those are going to be based predominantly on intraday and swing

his time frame. And he's trading a lot of futures. So we're going to spend a

of time going through e -mini futures, intraday, you know, into the short -term

swing time frame.

He's going to talk about tape reading using multiple time frame analysis.

And as with David, I'm going to become a student of William's and William's

going to put out a chart for me that I'm going to tape read and chart read. And

again, that will be a very interesting task. We'll see if I'm up to that.

Drills and exercises and homework are always a part of Wyckoff Analytics

classes. I just cannot imagine that our classes do not have homeworks for you

guys.

With that, let's just set out the intention right away. You are here for a

specific reason.

It's a really good reason. You want to improve.

The way to improve is not just to observe and to listen, but to actually

participate. And you could participate silently, meaning that as we go through

this material, and I'm asking the whole group a question.

You should be answering this question in your head. That's number one. More

active participation.

You have your questions box where you could type in any questions, any

any answers.

I will be asking you a lot of questions today as we go through the exercises.

I'm not going to volunteer people.

That's not my intention today.

But I will be asking you, and I would be expecting that for those who are going

to be very interactive with me today, uh type in fast because we don't have a

lot of time so i want you to be focused i want you to be on cue when i'm asking

you any questions uh so and with that let's just go to our material uh and

before we do this what are we gonna cover in series number one so here's the

whole curriculum that i've developed for this series we're gonna start with the

supply demand and effort versus result today we're gonna start And we'll devote

the whole session to bar -by -bar tape reading.

We'll talk about how do we describe the bars and their volume signatures. That's

going to be the basic definition that you will have to know by heart in order

for you to start seeing those things on the charts.

Obviously, I mentioned exercises. Those are going to be throughout the whole

session today.

We're going to talk about how do we... textualize bar by bar tape reading we

also will talk about the usage of analog bars how do we find those and what kind

of deductions we actually make out of those analog comparisons and then

obviously a homework as we come back to session number two next thursday we're

gonna review the homework i still don't know in which shape uh of form we're

gonna do this it just depends on how much material we're gonna cover today It

could be a self -review or it could be just, you know, some of the questions

that if, you know, if you have questions and I see the validity of coming back

to those questions, you know, we'll do that.

Next Thursday, the basics are going to be on swing by swing tape reading.

And we're going to figure out how to compare a rally to a reaction, how to

compare a rally to rally and then a reaction to a reaction in different

environments. so context is always going to be on our agenda and you know we're

going to look at the characteristics of the swing the price extension the volume

signature the texture was which the price and volume behaves on those swings

exercise number four is going to be on just tape reading the

swing then we're gonna dive into the contact

Then we're going to do another exercise on swing -by -swing analysis, applying

the Wyckoff price structure.

Then we're going to deconstruct the swing. So this is also going to be very

important. We need to understand what the swing consists of, you know, what

of elements, what kind of legs up and down.

And then we're going to also do the exercise on the analog.

homework as usual and then we'll start session number three with the homework

review and then the rest of the uh of the material in session number three is

going to be you know additional foundational knowledge other ways of how

could improve on seeing uh specific elements of you know tape reading and

we could add to our analysis that would be a pnf and volume and we'll do some

exercises on that We're going to look at the horizontal volume signatures and

how that interacts with the price and how we could tape read that.

That will be another exercise right there. And then we're going to go into

case studies.

We're going to talk about the synchronicity of the reversal.

Extremely important concept. I put it as a law number five in Wyckoff

methodology.

We're going to tape read the momentum.

So this is a very interesting skill.

So this is something that...

Usually, because we use mostly indicators at Wycliffe Analytics, we

don't, but we use that in scanning, we use this in other analyses.

But usually, I would force the students to start seeing the momentum with the

naked eye, meaning that without any indicators, can you identify whether the

momentum is increasing or decreasing.

And we'll talk about what kind of practical exercises on tape reading you

do by yourself at home after the completion of this course.

And for the final bit, we're going to do our market analysis in session number

three using our tape reading techniques.

I will be expecting that starting with this session, you could email me any

questions. Now, I most likely will not answer those questions in session number

two. I just want to make sure that we go through all of the material that we

need to go through. So, all of the questions are going to be addressed in

session number three. So, you know, start sending those.

And obviously, some of the answers will be given later on. So, if that answer

has been given in session number two and you sent the question prior to that,

I'm going to disregard that.

just because we are not going to have a lot of time.

And then homework number three, I'm going to give you the homework, and then

going to give you the solution on the class page.

If there are any administrative questions that you have about this

series or the whole course that we're going to conduct in the next three

please email us at wyckoffassociates at gmail .com and ask

our...

Chief Operating Officer, Nancy, any type of questions. You know, those could be

related to access information, webinar links, payments, and so on and so forth.

All right.

And by the way, one last announcement.

So today, even though we are thin from three to five, we could go

slightly beyond that. And for those of you who are my students, you know you

guys know this you know there's just too much material and i'm just the teacher

who just want to make sure that you guys uh you know get this and therefore i

want to go through all of the uh potential you know questions that we

today's material sam is asking will this session uh recording be available along

with these slides yes absolutely this is how we do this at y cup analytics uh

all of our sessions are recorded

they will be for all of those recordings together with slides slides in the pdf

format will be put on the class page the email with the access information

to the class page will be sent to you tonight probably around

between 8 and 9 pm pacific all right well let's talk about

the basics of tape reading and we have to start with very elementary uh

laws that we have um in wyckoff methodology law number one

is all about supply and demand and law number two is about effort versus result

okay before we do this couple more questions what is the best email address

use for the course related questions wyckoff associate

question.

Any chance you can post the slides before the session from Arvin? Arvin,

our student.

You know better than this. I don't do this and that's very deliberate just

because there are a lot of solution slides that I put in and also I've done

at Golden Gate University where I would give the slides to students and then

they would be consumed by the slides and not even pay attention to what I'm

saying. So I don't teach this way and Therefore, the slides are only going to

presented to you after the class.

How long are the class pages available after the completion of the class? From

John. So usually we have a one -year access for you guys upon the completion

the course. So we're going to finish in December.

For those of you who are taking only this period, we're going to be finished

the end of October. So a year from that, that's the time for you to go to that

page as many times as you want.

to listen to watch the videos i am just not a believer of a life access

because i think it's the most unmotivational tool for students when

the life access so it's kind of like yeah i can put this you know on the back

burner and just you know attend to this in a couple of years no you will not

just because if you are not gonna do this right now you will not do this

on so um i'm just not doing that type of thing but after

a year you could definitely you know renew your access for a nominal fee and

you know if you want to repeat the course after a year for sure all right

talk about uh effort versus results let's talk about supply and demand so

and demand is a very you know simple

methodology and the simplicity of it is that if there is more demand we would

expect the price to go up if there is more supply then we would expect the

to go down so very very simple the complication comes with the second law

law of effort versus result but at the same time this floor is actually

almost

not only inclusive of the supply and demand law, because this law is just

basically talking about price and volume being in harmony when the

effort is increasing and the price is increasing as well, or effort is

increasing to the downside and the price is decreasing.

So that's a harmonious existence between the effort and the result.

What's important about this law is the disharmony between the effort and the

result. What if the effort increases, let's say, to push the price up, and yet

the price does not go up? What does it mean?

Well, it means that there is an opposing force.

In the case of price rising, an opposing force will be supply that comes in and

stops the price from moving further up.

we could observe the same disharmony or divergence we could observe if there is

an attempt to increase effort to push the price down, and yet the price does

go down.

So what does that mean? That means that the opposing force, in this case, is

going to be demand, is present, and that stops the price from moving further

down. For instance, here is this example where in the established context of an

uptrend,

we are seeing how the volume signature increases whenever volume signature is

going to increase we're going to say that the effort is increasing as well so

if the prior effort was like this this volume signature then now effort has

increased so we are trying to push the price down in this reaction and yet

and therefore we're going to say a downward effort is increasing

and increasing substantially when there is a volume spike right here. And yet,

what happens with the reaction?

The reaction seems to be of the same magnitude as the previous reaction.

It doesn't extend as the reactions that we see in the trading range formation.

So therefore, we are going to say downward effort is increasing, yet what

is the downward result?

the downward result is not increasing it's the same as the previous reaction

we're going to say it's not increasing it's actually decreasing the decreased

result on increased effort in the uptrending environment would suggest

there is a presence of demand that is expanding and that is observing

supply and that would suggest if there is an absorption of

supply that would suggest a continuation of an uptrend

and that's the basic logic behind the law of effort versus

result and we could reverse this and just say for instance let me

just quickly see for instance this area right here and i would have to figure

out exactly

that correspond what do they correspond yeah so this is the law probably okay

so then the next two bars look at this the next two bars still have a

high volume signature and then they still going up but if we would take this

spread right here and this is where the daily spread is contracting relative to

the spread the daily spread that we've seen you know on the prior day but the

volume signature is the same so effort stays the same and yet the

result upwards is diminished because of the spread what does it mean

there is some presence of supply so there is divergence between the effort

and the result

and this is the opposite of what we've seen in this area right here in the

uptrend what does this suggest this suggests uh that supply is present and

could have some kind of reaction um and reversal so therefore

there's going to be some kind of continuation of a decline

all right uh don't worry if this is

something new to you and you still have to get used to this for now um just take

this knowledge for what it is and we as usual in our classes is going to repeat

the same concept over and over and over again and by the end of these three

sessions i guarantee you you will understand and you will be able to see

concept on the chart and if you can't you know contact me and i will go

with you individually you know through that particular concept but definitely

you know um you know don't contact me just you know with any type of question

you know because uh that would just be a little bit too much okay so how would

we be describing effort how would we talk about the effort we would just have

in our abbreviation letter e for effort increase of effort decrease of effort

as the increase in volume from the previous volume signatures and usually

would look let's say if we are looking at the update uh we could look at the

volume of the previous update that comes maybe on the same rally or maybe on the

different rally if we look at the volume increase or decrease for the down days

we're gonna you know uh down day we're gonna find the down day that comes prior

to that we just want to assess whether the effort on the demand side increases

or whether the effort on the supply side increases and how the price actually

behaves with that increase of the increasing effort if we are going to

increase extreme uh effort increase which is gonna um do this and then

effort is gonna be a smaller

u letter before a capital e and the downward effort a small d letter in

e and this is just semantics so this is not as important but you know as we go

through the exercises it's going to become to you very evident very quickly

it's just an easier way of abbreviating what exactly we want to say what about

the result well the result is a little bit more complicated because we want to

not only understand how we abbreviate and how we show the increase or decrease

of the result for the up bar or for the down bar we also and this is extremely

important we want to understand how we are measuring the result and we're going

to measure it by three things we're going to measure it by the increase or

decrease of the spread and don't worry about the definition of the spread right

now We're going to cover this in the next couple of slides.

And we're going to talk about the spread as a spread, and we're also going to

talk about the true range.

So, again, we're just going through the basics right now.

But we want to understand, on the results side, does the spread increase

decrease? We also want to understand the situation with the close.

And with the close, we want to understand two things.

How does the close behave relative to the actual spread of the bar?

Are we closing in the upper part of the spread?

Are we closing maybe above 75 % of the spread? Or are we closing maybe

into below one half of the spread?

So those are the definitions that we're looking for in how we

analyze. close the second point of analysis from the close point of view is

going to be how does the close to close behave so meaning that from the previous

close to the current close and then to the next close and then to the next

we want to see the progression of the price movement based on the close and

just on the highs that would give us an understanding of the momentum feature uh

in tape reading uh and also would suggest some kind of shortening of the

or extension of the draft but uh with all of that if i would be

looking at the spread and the clothes i would say that those are just

characteristics of the result but what i really would like to

extract from the picture is the intention

Or rather, was the intention satisfied behind the movement of the price?

Have we overcome a significant resistance or support level that was in

front of the price, that was in front of the current price?

And if we are going to say no, then even if characteristics could be bullish,

but the intention was not satisfied, we're going to say that the result was

diminishing.

If the intention was satisfied, then we obviously would say that the result was

expected.

Let's talk really quickly also about the volume spike. So this is very important

because a lot of you ask this question almost right away when I talk about

analysis, tape reading, or just structural things.

So where do we see volume spike? well here is one here is another there is a

bunch of volume spikes right here there's a small one here there's a big

right here so we're gonna have up spikes and down spikes up spikes are gonna be

on the bars that are getting up that are moving up and our down spikes

are gonna be you know on the bars that are actually moving down or getting down

now in the case when we have the bar

that has a big volume spike and the price goes up, the volume is increasing.

Demand is increasing as well, and demand at that point is going to dominate the

supply. That's what we're going to say, and that's how we're going to put this

in our volume equation.

But at the same time, because of that volume spike, there is always the

of the opposing force.

And not only that, the opposing force on the volume spike is always going to

increase relative to what it was before so for instance if we're looking at this

bar right here and we would be comparing it to this bar which both are down bars

but this one is the volume spike and with the volume spike here we're going

say that because this is a bar down supply is going to increase and demand

increasing as well and because demand is increasing we would be expecting some

kind of stopping action maybe some kind of change of behavior potential

trading range so all of those things are going to be present if the opposing

force is increasing relative to what it's done before so look at this supply

level and then look at this big box so it's not just supply alone on that

reaction

uh it's actually demand as well and i'll show you other ways how to identify

demand on those type of bars that have that big type of volume spike

all right uh let's go further down the road

let's do uh let's talk about the description of bars and volume

then If you guys have any questions at this point, this would be a good time to

ask after we go through the next three slides, before we start doing the

exercises. I want to make sure that whatever material I'm giving you right

even though it's basic, but it's understood, and we feel comfortable

Alright, so this is actually the material of the Wyckoff Trading Course.

For those of you who are not familiar, this is our flagship course.

It's a 15 -session series.

So go check it out if you haven't taken this before. It goes into such depth of

the Wyckoff methodology and is a foundational course as well.

Let's look at the bars. And I'm usually using candlestick bars.

Usually there is a question, why do you use candlestick bars and not, you know,

vertical bars, just irregular bars?

Well, candlestick bars are a little bit more visually telling.

They just show the body in, you know, in much faster way. You see right away

that it's an up bar by the collar. That's number one. You could see the

expansion throughout the whole bar or decrease.

of the spread throughout the whole bar. So it's just a little bit visually

pleasing to me and I'm just kind of used to that.

Do I use candlestick patterns?

I do not use candlestick patterns per se, but the tape reading is all about

those type of patterns. So if you tape read, you should be able to understand

candlestick patterns very easily.

Well, let's go through this example.

And this is a theoretical example.

One of the tasks that I wanted to understand and to go through is

to understand what the spread and the true range is.

So the spread, whether this is a daily bar, whether this is a one -minute bar,

whether this is a yearly bar, is going to be the difference between the high

the low.

So we're going to say that this distance right here is our spread and

obviously the bar is going to consist of four major data points for us the low

the high and the open and the close and if the close is above the open we're

going to have a green bar if it if the close is above the previous close we're

going to have a green bar in some software if the close is below the open

might have a still bullish day but You know, you might have a different color.

Sometimes I feel like on stock charts, for instance, like a black color. It

shows to you that it's a bullish bar, but the close is below the open.

Well, this is just a small nuance, so let's continue.

Whenever we have a gap, that's when we are getting a little bit into trouble

with the definition of the spread.

There are two types of gaps.

the ones that have been covered and by being covered I mean literally on the

next bar not in a year not in multiple months but on the next bar

with the intraday action so here we see that the bar opened with the gap and

then there was an attempt to go down intraday to the low that's what's

the low and then the price went up to the high and closed

slightly lower level so we could see this and i put for you here the intraday

action first the gap then the open then the first move down into the low

then there is a lot of demand and it carries us up into the high and then

the close we see some profit taken so with this type of covered bar we don't

have to worry about the definition of the spread we still because

low actually goes below the close of the previous day and we are covering this

gap this spread is going to be defined as the high the difference between the

high and the low so still the same thing as here now the trouble

that we get into comes later on when we actually start

seeing the gap that is not covered

on the next bar so how do we define the spread well there are two definitions of

the spread or rather two definitions the spread and the true range that we have

to remember here the definition of the spread let's say if this is a daily bar

it's still going to be the movement of the price during the day and

that means that we're going to have the high for the day and we're going to have

the low for the day and that would be

by us defined as the daily spread.

The true range is something different.

The true range is the difference if we have a not covered gap.

It's the difference between the previous close and the high if we're in the

bullish scenario here.

So this whole distance that the price covers would be

considered a true range. The high minus the previous close.

you might be asking why do we do this you know why do we need um a true range

what's the logic behind it well the logic is very simple the bar is actually

bullish just because we have a gap and we still have continuation during the

to the upside but during the overnight price action and this is why the gaps

happen there is some kind of institutional

exchange of shares that is happening and institutions are marking up the price

in the overnight action into the open on the next day so

could we say that this is an opposing force no it's in line with what the bar

actually doing so therefore we're going to say that the true range for this bar

with the overnight price action was the difference between the high the previous

close and then again you know just one of the skills that i require

our students to have especially as you guys go through the wtc course and the

practicum is to understand how you could extract the intraday data from

your daily bars because it's and obviously it's a rough approximation

But at the same time, it's a very, very useful skill to have to understand by

looking at the bars what is happening here and how the price unfolded during

intraday.

All right, let's look at the different environments. So now we're looking at

downtrend and the down bar. Again, the spread is going to be defined very

easily. It's the difference between the high and the low.

And look at this very interesting bar.

It has this, what we're going to call a supply tail.

A supply tail meaning that there was some selling on the way down and supply

most likely has increased.

So how would that look on the intraday?

Well, one of the possible scenarios here is the open attempt to go up

into the high and then supply comes in and puts the price down and below

is below the open and the close is below the open so your body is going to be

the difference between the open and the close it's going to be bearish because

the close is below the open and then you're going to have a tail on both

and your supply tail is going to be above the open

If we are going to have a covered gap, the spread is going to be defined, you

know, in the same way as everything else. We're going to be looking at the

difference between the high and the low.

There is nothing, you know, for us to think about here. But once we go into

not covered gap, then we have to extract the true range. And

it's going to be the distance that the price travels from the previous close.

throughout the overnight action and then into the low that's going to be our

true range for this bar and again it's going to be very important because the

look of the true range bar is different than let's say the spread of the daily

bar so i just want you to remember this okay

together and that's what the volume of spread analysis is all about one of the

main ideas that um is extremely important and you know throughout all of

classes including wmd classes on wednesdays i emphasize that

if you're using vsa the volume of spread analysis you need to understand and

define the context of where you know have your signals and where they come do

do the same signals come in the uptrend and let's say in the non -trending

environment consolidation and what would they mean they would mean different

outcomes different meanings so we need to contextualize our bfa signals

well we're going to start with something again very simplistic and again this

whole session today is all about basics so what do we do here

we're going to look at the very basic definitions of the spread and volume and

this work actually was done by jerry blythe he was one of the students in

classes at golden gate university and this is you know his work so i just want

to give him the kudos and give the kudos to hank this is where you know it all

kind of like started so jerry gave us a little bit of the synopsis as to how he

was looking at the spread and volume in general so if the spread is increasing

there is really nothing uh that is uh gonna stop this uh the movement of the

price until we have the opposing force increasing if the spread is decreasing

there is some resistance to price progression and if the spread is average

just a normal trend action So, very simple, very understandable.

Volume is going to be slightly more complex, because usually volume is going

be associated, and I love this expression, it's being associated with

of power behind the move. And whenever we talk about effort, we

actually mean increase or a decrease of that force of power behind the move.

We mean the increase or the decrease in the volume signature relative to what

that effort was before for the up bar or for the down bar, for the upswing or

for the downswing. And you kind of already could see where I'm going with

If the volume is increasing, most likely we are talking about

some kind of change in the supply and demand relationship.

usually i tell my students that you have to think supply first and then demand

and it's just going to be extremely important to understand that supply is

something that institutions either observe or they distribute supply in the

marketplace so therefore uh you know whether they are buying it and locking

down for the duration of the trend

or whether they are distributing and the supply becomes available in the

distributional information supply is of utmost importance to us

and then we could think about the demand if the volume is heavy that usually

again would indicate the supply uh there are some you know spots where we could

you know see heavy volume signature and that could indicate the opposing force

coming in So, for instance, on the reaction, in the uptrending environment,

we see a heavy volume, we would suspect that there is some demand there and

there could be some stopping action in the reversal.

We also would be expecting that the increase of the volume signature could

in the areas of the breakouts, where we have some jumps across the creek or we

are jumping above the resistance.

with jumping on news let's say some earnings and so on so forth still even

that there is always an opposing force that is going to be present and that's

going to be increasing on the heavy volume signature and especially on some

of massive volume signature that we would say that that signature is

if the volume is decreasing

then there is some kind of deterioration of that force and we could expect a

reaction or a rally which is counted to the main uh trend and then

obviously if the volume is very light it's either a little push or supply is

present um i would actually say that's a you know i would take this out so just

a little push and a poor demand or poor supply that could be uh make us

vulnerable to any type of the reaction well this is all good but you know we're

talking about the spread in volume in different uh you know without

any context and without combining them together so let's just look at the

combination now uh where we are using the spread where we're using the volume

signature

and where we're defining the context and then we want to understand what

the effort and the result is doing and we want to also understand what kind of

volume equation or effort in the result equation we would have so let's look at

this first slide and the most important information on the slide is right at the

top we are in the advancing

let's just remember that so the contact is the uptrend the spread is increasing

and the volume signature is increasing as well please please note

that this volume increase is actually you know quite uh quite normal so there

is no abnormalities in the way how the volume signature increases so we are

seeing the increasing effort and we're seeing the increasing results volume

is increasing demand is increasing and in this case we would be saying that

supply is decreasing supply could be decreasing just because absorption has

happened before or there is no availability of the supply through this

particular price level and therefore just demand comes in and pushes the

price up so when the effort and the result is increasing this way it's

definitely a bullet picture second scenario we're still in the uptrend now

this case the spread is decreasing and the volume is actually increasing

so we are increasing the effort to push the price up and yet we are receiving a

decreasing result why would that be under what circumstances that would

It only would happen when the opposing force, which is supply in this case, is

present. And not only present, but increasing as well.

So therefore, we still would say that demand dominates the supply in this

But because supply is increasing, we could expect some kind of stopping

maybe a reaction, reversal, maybe even a trading range, change of behavior.

so we are expecting some kind of vulnerability and maybe some attempt to

the uptrend and reverse so some bearish outlook right there unless

we can overcome it third scenario uptrend now in this case we still have a

decrease in spread but now instead of increasing volume signature we have a

decrease in volume signature so the effort is decreasing and the result is

decreasing at the same time so we know that with the decrease of the effort

demand is going to decrease for sure and then supply could act in a different

way it could decrease it could be the same it could increase slightly so

therefore we would be saying that there is some kind of vulnerability to a

reaction that we could expect at this point and therefore our

outlook here is going to be more bearish than bullish next scenario an uptrend

again spread is increasing and the volume signature is decreasing so

effort increasing results so let's think about the demand and supply what's the

relationship here volume is decreasing and we are going up so demand is

decreasing and supply is decreasing at the same time And on that background, we

are making new highs.

So therefore, there is some kind of ease of movement that we observe where the

price on the diminishing demand characteristics could overcome specific

of the resistance and commit above them and stay there. So that would mean that

an ease of movement is underway and we are bullish.

increasing spread increasing volume but it's a massive effort it's when you have

that volume spike and remember what i said at the beginning of the session

we were looking at the effort and the result whenever we have those volume

spikes there is always the presence of the opposing force and therefore there

a vulnerability to stop to reverse to produce a change of behavior

and then go into a different environment and usually those massive volume

signatures are going to be climactic in nature they could be the terminal climax

but in a lot of cases those could be just temporary stopping actions going

let's say a reaccumulation or a redistribution and they could happen on

kind of events and so on so forth so but usually

suggest

let's go to the next slide we're almost done with the basics let's now look at

the declining market and we really really again have to remember what the

context is

so the

context is a downtrend on the increasing spread with the increasing volume

signature

effort is increasing and the result is increasing and everything looks normal

the way how the price expands and the way how the volume expands.

We know that supply is dominating the demand and that demand is diminishing

that is in line with the downtrend and is still bearish.

In the next scenario, which is still downtrend, decreasing spread on the

increasing effort suggests that effort is increasing.

And we are seeing the decreasing result.

So what is this?

What is happening on this bar and with this volume signature?

There is no progression to the downside in the same manner as the previous bar.

So there is some resistance that demand is providing as the price goes

down. So therefore, demand is increasing.

but supply is still there just because the volume signature is increasing so

therefore there is some kind of vulnerability to produce some kind of

doesn't mean that we're gonna reverse and just you know the downtrend is done

what i want you to remember uh is that we would need to

understand that the reversal needs to happen and confirm itself And the change

of behavior needs to happen and reverse the downtrend.

Somebody is asking, Joseph is asking, but how do you establish the context?

Well, that's a science of its own, right? But, you know, the definition of

trend, the definition of non -trending environments, those are very kind of

rudimentary, like coughing.

uh tools and we study those in the wake of trading course so for those of you

who would like to study those in more detail you know please refer to that

material i'm just going to give you the definition um you know of the

environment uh right away so you don't have to think about it as we taper it or

we'll just you know do you know small pieces of analysis and you'll see you

how i define

next scenario we have three more and then we are done with this with the

downtrend decreasing spread and then decreasing volume signature

so still that is suggestive that demand is there and it could be in

different shape and form right it could be decreasing it could be the same it

could be increasing but supply is definitely is losing its power So

less evident and therefore there's some kind of vulnerability to produce a

rally. Next scenario, we're still in the downtrend and

with the increasing spread and the decreasing volume signature.

So very interesting scenario where both supply and demand is decreasing and the

price falls under its own weight.

And if we have the commitments below the areas of the support, we're going to

say that this is an ease of movement, a very important Wyckoffian concept that,

again, we study in detail in the Wyckoff Trading Course.

And we'll definitely go through this, so don't worry about if you're not

familiar with the ease of movement. I'll devote some time to that.

So here, in this scenario, it's still bearish, just because...

There is no demand that is present.

And with the smaller supply, the price actually could go down.

And the last scenario, last interpretation, still in the downtrend,

increasing, volume is increasing, and there is a massive effort that is shown

to us in the volume spike.

So what does it mean? It means that there is demand that is trying to stop

downtrend. and there is some buying well and whether this stop in action is

going to be an intermediate selling climax or it's going to be a terminal

selling climax we would have to see you know through the prism of our wake of

price structural analysis but uh it's most definitely that demand is present

and at least at the minimum that increase of the demand would dictate

will try to stop price from going further down and therefore will produce

kind of reversal or the reaction up all right

well let's see guys um what kind of questions we have on this material so i

trying to go through this really quickly for those of you who are not familiar

with this material please go through this again

by listening to the recording. Stop the recording at the places where you

feel that maybe you need

more time to spend on those concepts.

Making notes actually helps a lot, so I would fully expect you to do that.

Stefan is asking, what's the difference between scenario number 6 and scenario

number 10? It's all in the volume signature.

So it's all in the degree of the increase of the volume signature over

previous instances, over the previous bars.

So we could see that in instance number 10, we are seeing a

massive effort to push the price down, which is basically

different than what we have had in scenario number 6. And that's

the main difference there.

Jeremy is asking, regarding volume spike, I assume it's in the context of

time frame of the trade setup.

Is this correct?

Well, the volume spikes, I mean, obviously are going to occur, you know,

throughout. So we will have to look at the context of where it happens. Right,

Jeremy? So, for instance, if the volume spike happens, let me just draw this.

Let's say we are in the trading range and we could have different.

Volume spike. So let's say a volume spike here in the context of the

action of the downtrend would mean one thing. This is a stopping action for the

downtrend. The volume spike, let's say in phase C, would mean

somewhat the same, but from a different environment. If we were in the

downtrending environment, in phase C, we are in the consolidating environment.

spike and let's say the price reversal would mean somewhat of the same but you

know very nuanced uh price action uh which slightly differs from the selling

climate we call we could also have the volume spike uh let's say on the sign of

strength bar in the on the sign of strength rally so that's a different

for those volume spikes we could have the breakout going into phase e that

could have that spike it could come on earnings

So again, contextualizing what we see is going to be extremely important and

crucial for us.

A question regarding the extended hours trade. Is it institutional or retail

selling, depending on which asset, for instance, Tesla or E -Media, so from

Arvin? Usually the extended hours are just professional hours, even though we

retail...

traders could have access and you could actually trade in the overnight but

absolutely not recommended because of the volatility that you could you know

observe there or the low liquidity depending whether there's some kind of

know event or not joseph is asking who is controlling the supply and demand

influences or is it just random

So it's a very interesting question, Joseph. So I would give you a two

answer here. It's both random and it's both controlled by big money.

So why would we say that? Well, the smart money or the big money, the

composite man, composite operator type of money, will always be...

levels of the supply they're going to consume supply observe supply and then

they're going to put it into the vault for the duration of the uptrend and not

present it as a distributional supply throughout the uptrend so in that sense

they will be controlling the supply and obviously providing the demand and will

be controlling the demand having said this the price movement is still random

from bar to bar somebody might come in and some money manager will have to

cash you know for whatever reasons that they have whether this profit taken or

you know distributional uh raising of the money is due to you know some of the

withdrawals from the clients that they have or maybe their methodology and

models are showing that they're gonna profit take here or completely close

position but this

price cycle still going to continue already without their participation

type of you know behaviors are going to bring uncertainty to the market so

we can't really predict what exactly going to happen then on the next peak on

the next minute on the next in the next hour on the next day but we could

definitely see uh you know big money being in control of the bigger trends

then, you know, obviously on day to day, it's all random. And that's how I see

it. And that's what makes sense to me in terms of how I interpret the market

from that perspective. Very interesting question.

All right. So let's do our first exercise.

This is not going to be necessarily an exercise. I'm giving you a solution

This is an example of bar by bar analysis.

And I just want to go through this.

by myself first and for you guys to follow my logic so as i go through

bar by bar if you have a question write uh bar number let's say

bar number one and then your question and then i will know you know what to

refer to please don't go through this right now uh this is for you for later

references

I want you to just concentrate on my analysis.

And this is, you know, the paper reading is just a very unique skill.

You can talk about it. You can listen to a presentation about it.

But unless you actually do it yourself, you will probably not get it

in depth.

So as I go through this example, I want you to analyze each... bar with me

together and this means that you have to concentrate on the chart and not on the

solution all right and then we'll come back to the solution all right well

start with bar number one this is our uh bar that is very interesting and before

we do anything you know in terms of analyzing the actual single bar and

not analyzing the swings yet right so that's going to come in session number

You need to define the buyer's background.

Are we in the uptrend or are we in the downtrend?

And let's have a pop quiz here.

How do we define an uptrend?

What would tell us that we are in the uptrend? What's the most simplistic way

technical analysis to define the uptrend?

All right, all of you guys are so great. Wow, that's awesome. All of you are

saying hi, hi, hi.

low lows ascending structures up sloping structures absolutely correct

so we see that here and there was a question of how do we define the context

well in this case this is as simple as this higher highs higher lows and we see

how the support areas are going up we see how the resistance areas are also

going up okay so very good and i see that a lot of you are paying attention

thank you so in this background which is bullish bar number one actually has an

increasing spread and an extreme highest volume signature so what do we actually

suspect here how do we interpret this bar we are saying that the downward

effort on this bar is increasing and also the result is increasing

why is the result increasing well because the downward spread is

this and we said that the spread is the difference between the high and the low

if we would look at the previous bars that are red bars that are down bars and

now you kind of could see why i'm using the colors because it's just much easier

for me to go to those specific bars and i could see how during the uptrend all

of the reactionary bars were not that significant and even if they were there

are some tails which we're going to call demand tails where the price is being

marked up during the intraday action into the close and that is usually

now this is a different type of bar this is what we're going to call is the

change of character bar it's completely different from what we've seen before

on the extreme volume signature and on the extreme

and also look at the last commitments to the upside a series of up bars and all

of them all of these closes are being negated by the uh close of bar number

so what would we say about this bar well this bar definitely looks bearish and

therefore if this is a bearish bar and if it acts as a change of character bar

we could expect some kind of reversal which we've seen here stop in action of

the uptrend and um change of behavior definitely seeing that and maybe change

of environment from an uptrend now we could go into a trading range and look

what we are doing here we are in the trading range you know for the duration

approximately two months or so actually not too much these are daily so um

i don't know how many bucks are here but yeah pro so 22 bars so a month time

okay uh next bar the next bar is up so how do

we interpret that there is an attempt to rally where the upward effort

is increasing is increasing relative to war well there is a zero bar right here

that is

uh an up bar as well and we could see how the volume signature is increasing

with that increase in price do we have the increase in the result do we

overcome the high of the previous bar no do we increase the spread yes so the

bullish characteristics are increasing relative to bar number zero but we can't

overcome uh this significant bar so the result is decreasing and we're still

bearish at this point of time we are saying that because we're still bearish

we are expecting the continuation of the reaction

obviously saying failed intention yes the intention behind bar number

two was to overcome bar number one and it didn't do so so still bearish bar

number three is very interesting because the effort

on this bar is slightly decreasing than on bar number one but yet

we are producing a much more favorable bullish result where we have a

bullish tail and there is a rally into the close of that bar so that tells us

that in this volume signature there is some presence of the demand And if

is present and increasing, we could suspect that there is going to be some

of rally.

Now, whenever we tape read, we have one rule, and this is probably Raman's rule.

This is probably like a pure Romanism, as my students would say.

When we think about the change, we have to think that it takes time

to produce a change.

and therefore we could see some science of the demand coming into the market

but yet we could still be in the uh reaction here so we've seen

some demand on bar number three and we're suspecting that the price should

stabilize right here but we could have still retest of the lows and even lower

prices on the diminishing selling characteristics so let's see if that is

to happen on bar number four so bar number four still has a relatively high

volume signature and now look at the spread it's actually increasing over bar

number two so we would be saying that the result on bar number four

uh is uh increasing in terms of the increase of the

spread and in terms of where the close is

But remember what we've talked about the intention.

What's the intention behind this bar?

If there is so much effort, which is still a pretty high effort, to push the

price down, what would we expect the price to do?

Probably to go below the low of bar number 3 and to commit below it. Do we

do it? Do we close below that level?

No.

And the reason why we don't do that... is because demand became present on bar

number four so our expectation is that we are actually bottoming because demand

is present and demand right now is consuming supply and at this point we

be saying that we're seeing a potential stop in action in the volume and the

price uh actions and we are probably in the trading range with these

type of boundaries

All right, well, let's see if we could find the confirmation that supply is

actually deteriorating and that the demand is capable of maintaining the

at the same level. Bar number five has the intraday attempt to go up.

And then supply comes in because we see that into the close, there is some kind

of selling.

the volume signature is still high but it's not as high as the previous bars so

therefore we could conclude that the selling is actually diminishing even

supply is available and by the position of the close this is actually a very

favorable result even though we still in the reactionary mode we already seen

that the last three bars are changing the direction of the bias or at least

trying to change first demand comes on bar number three and that's available

number four does not produce favorable uh result to the downside and then bar

number five is actually trying to rally uh supply comes in but does not close

below the close of bar number four so we know that demand is active in this area

what we need to find out now is where the demand could start pushing the price

up and the price could go up with some kind of ease so we look at bar number

bar number six has diminished volume characteristics so effort is decreasing

relative to bar number five but what is the result doing result is actually much

better why well because first of all we are closing at the high level And

secondly, our close is in the upper part of that bar. It's above one half of the

spread. So those two things are suggesting that now demand is becoming

more in control and there is on the diminishing volume characteristic some

of ease of movement which is bullish.

And our expectation here is that we're going to continue with this rally.

And we could potentially have some targets here where we would be expecting

stopping action, at least initially.

So let's see what happens next.

Bar number 7 kind of has the same characteristics.

Volume signature goes down, but there is a progression from close to close.

So there is, again, that ease of movement that the tape is showing us.

Bar number 8 has a gap.

and then the price continues going up, and then there is a supply tail. Why

would supply come here at this level?

Well, there is a resistance point right here, so therefore we would be expecting

supply to come in.

But what kind of supply does come in?

Look at the volume signature.

What can we say about this volume signature?

Well, demand is most likely going down, and supply is going down at the same

time. So even though some supply comes in, it is not a

very threatening supply, and it's only coming in because of this resistance

right here.

Rogan is asking, would bar number 6 be an entry point?

Absolutely. This is a really good observation. So bar number 6 would be an

point. Bar number 7 would be an entry point. And even bar number 8 would be an

entry point.

if we have some kind of target somewhere here and obviously by entry point i

mean this is our first scaling point of entry this is our second scaling point

of entry and this could be our third uh point of entry if we are scaling into

the position and the size of the third unit could be much lower than the

previous two bars because we are uh advancing uh further away

from the point of risk which is going to be bar number five and bottom but six

all right well supply team let's see you know our expectation is that it's not

going to produce a big reaction why because it's just there is not a lot of

supply in this volume signature and we are seeing this as a confirmation bar

number nine bar number nine is the breakout bar of the local resistance and

happens on this slightly ever slightly uh increased volume signature so Demand

kind of stays the same, and that pushes the price in a much better way.

So we're seeing a better result.

We see the commitment above the resistance.

This is bullish and suggests continuation.

Now the next bar, number 10, has the increased volume signature.

So the downward effort is increasing relative to

the bottom nine.

But it's decreasing relative to the last instance where we actually had a

downward bar.

And this is a more complicated concept, so I'm not going to go into this a lot

today. But you could compare bar number 10 to bar number 9.

You could compare bar number 10 to bar number 8 because supply was here.

You could compare bar number 10 to bar number 4 because...

The bar number 4 is the last downward bar that we have. So if we would be

comparing it to bar number 4, what do we see?

Is this a meaningful supply?

No, after decreasing significantly.

Is this a meaningful result to the downside relative to bar number 4? No.

Now the reactions are not happening in the same way as they happened on bar

number 1 and bar number 4.

So therefore...

it's still bullish.

And we still could expect a continuation of the price movement up.

Why did we stop here? Well, again, the next level of the resistance.

Very logical place for us to stop where buyers stop buying and where sellers

might come in and take some profit.

And that's kind of like through the tape reading.

you know bar by bar you could see the logic of where the price stops or why

price stops at the specific levels bar number 11 we don't necessarily have

um you know demand that would push us up or with slight increase in

the volume signature we could say that maybe there is ever slight increase in

the supply and somewhat ever slight increase in the demand that absorbs that

supply

And after that, we should see whether there's going to be some kind of

continuation. Well, before continuation, bar number 12 is, again, non

-threatening, same level as bar number 9, and it is even smaller

spread. So if there was some selling on bar number 10, bar number 12 is just non

-existent selling that doesn't produce any meaningful results.

So it gives us a sense of timing that now the price should continue going up.

In which manner it's going to continue going up? Bar number 13, obviously, is

one of the significant bars. And when we're comparing it to the previous

bar, which is bar number 11, you could also compare it as an analog to bar

number 9.

In case of bar number 11, slight decrease.

In the volume signature, in the effort, with the more profound

increase in the results, where the spread is increasing, where close is

more favorable, where we're overcoming the resistance that was very significant

for the duration of bars from 1 to 12, it shows to us that there is a

breakout and ease of movement and we're still bullish.

Next bar is very interesting and I would still say actually bullish here still

and then bearish as a confirmation.

So what do we see on bar number 14?

Diminished effort to push the price up and the spread diminishes. So we would

say that this is a vulnerable place.

It could produce some kind of reaction but we're still bullish because even if

we produce some kind of reaction like we did here that reaction could be bullish

so what happens next after this vulnerability bar number 15

well this is where something changes if we would look at the effort

of bar number 15 and would compare it to the previous downward effort which is

bar number 12 we could see that the effort is just ever slightly less

or somewhat the same.

And yet, what do we see in terms of the result?

We could see that the bar is, that the spread is expanding, that the close

is somewhat bearish, and we are actually covering the body of the previous up

bar. So on bar number 15, we see that the downward result is increasing, which

is bearish.

And after the indication of the vulnerability, with that increase of the

and the result, we know that most likely we're going to go into the reaction.

So you could see now how we've read through this whole swing up.

And we first said at bar number three, we have emergence of the demand. Bar

number four, less selling. Bar number five.

sustainability of the demand and less selling bar number six is the

that now we're gonna go up bar number 15 tells us that we are done with this

upswing and that's the beauty of the tape reading is that it shows you the

change in the behavior of the price action and uh

it suggests that

not only going to change the behavior in the reverse we're going to have an

upswing and then that upswing is going to end with its own change of behavior

so here is that change of behavior change of behavior and here's your trade

you're a swing trader this is it all right a couple of

questions could you say that demand is located above bar number one bar number

14 demand is available uh that demand is located

above bar number one and bar number 14.

well because at the point like before bar number uh

13 and before number bar number 24 do we

know that the demand is there well perhaps right so if we let's say from

prices traveling up We know that if there's going to be a breakout, like on

number 13 and 24, there will be some demand.

And some weak hands demand could be available.

Some strong hands demand could be available as well. But we don't know for

what kind of quality of the demand will be available.

So therefore, we have to wait and see how the price actually unfolds and then

make that type of judgment.

Can you explain again why number 6 is a confirmation?

Sure. So bar number 3 has an element of demand behind it. We see this in the

tail. We see that in the high volume signature that suggests that demand is

there and it's expanding.

Bar number 4 on the diminished volume signature suggests that there is less

selling. Bar number 5 produces stopping action for this whole reaction but has

some selling.

that doesn't produce for the first time a downward looking bar so therefore we

know that with the relatively high volume signature demand is becoming more

control and as bar number six goes up and outperforms bar number five

on smaller volume signature we see the ease of movement with which the price

moves up and therefore by number six confirms that demand now is in control

all right so what else bar number 16.

okay hamid uh we have not covered that bar yet so you gotta slow down right so

we wanna go with the pace that we have how would you time entry around bar

number uh 9 and 12.

use stop by orders i'm often concerned about pin bars using buy or sell stop

orders types from jeremy uh okay yeah so some tactics here uh let's say that

we're in this position with three units uh we're probably going to be taking one

unit off around the area of the resistance just you know to have already

profitable trade and not to worry about this our stop loss is going to be below

bar number nine so our entry and i like those type of entries on stop by um

yeah we could definitely buy on bar number 13 as additional unit and then

number 14 will produce some kind of hesitation and bar number 15 will be our

exits so that would be our tactics so there's a kind of the traits that we

have okay let's go forward so now uh we said that bar number

15 you know is a change of character bar and then perhaps

is done well we need to confirm that bar number 16 same type of effort and there

is an attempt to rally but then there is a failure and slightly lower close so

that's a slightly more bearish bar than what we see uh you know from previous

price action and suggest continuation bar number 17 is an attempt to rally

at the result of this rally we see almost nothing there both in the volume

signature and the price action so we know that bar number 17 is all about

demand and we could expect continuation of this reaction bar number 18

does not produce a lot of selling but there is no buying either so therefore

still continuation to the downside bar number 19 no emergence of the demand

So the price kind of falls down under its own weight.

And bar number 19 is still bearish. Bar number 20 has

somewhat of a promising attempt to stop the price from moving down

because the volume signature slightly increases.

But yet the result is still not favorable.

So it's almost like what we've had here on bar number three. There is some

suggestion, a hint that demand might be present.

But, you know, we still don't have a meaningful demand and still supplies

and control.

Bar number 21 kind of have the same definition of no lift.

So we're still in the downtrend. And then bar number 22 is of.

very interesting uh to us in terms of where it occurs contextually

what kind of volume signature we have there and what kind of price structure

that spread we have so let's go through this one by one uh the volume is

increasing and it's the highest volume signature in the last five days so

whenever we have that you know and we kind of would say that this is a local

volume spike right so because the the price goes down supply is increasing we

know that but also we are going to say that demand is increasing as well

the volume spikes are like that it's the presence of both uh forces up and

down so therefore we would be thinking that we might have some kind of stop in

action possible reversal possible change of behavior

possible trading range, but we've been already in somewhat of a decline or

reaction that is opposite for the definition of the bias itself.

Also, please look where this bar occurs.

The context of that is that we are testing the level of the resistance that

broke, and we are testing also the breakout bar number 13.

and look at the volume signature of third bar number 13 and look at the

signature of all of the bars that come after that which is the strongest bar of

them all volume wise obviously bar number 13 and now we're seeing

that there is some demand that is coming in at bar number 22 so we would

be expecting a stop in action on this bar and as a confirmation we need to see

close above the high of that particular bar preferably on the expanding volume

signature that would suggest that demand indeed is expanding further and is in

control and we have exactly that and that would suggest for us you know

overcoming of that level the high of bar number 22 after the emergence of the

demand that this could be a very logical point of entry for us or an add -on we

also could add to the position at the point of the close if the close is

favorable if the close is above one half of the spread if the volume signature

is expanded suggesting an increase of the demand and if the close is above the

high of that loss commitment to the downside did you guys get this

very interesting spot right here as it was here so

we're seeing that change of behavior and we are contextualizing the signal as to

where it happens in the price structure all right well if that is understood

then um you know let's just let me see one question here could the reaction

to news create a false supply demand treatment from joseph yeah for sure for

instance

You know, one of the false readings that we've just recently had in the market

was the news about the stimulus package from Trump administration.

The market reacted very sharply on the intraday level on Tuesday, 100

points on the S &P.

And then, you know, after that.

reversal up just because the news you know turned around bar number 16 what

about it I mean I think that we've talked about this same effort and then

trying to rally but we can't so with that effort where that is a suggestion

supply is still present and that is the suggestion of the continuation that's

our interpretation of our number 16

higher effort but barely down move well you should be thinking here what is

happening intraday right so from this law what is happening first or when the

market opens is there is there a rally i mean if we

would expand this a little bit right so from the previous close we are opening

slightly up and most likely we are rallying and then

As the rally fails, we are going down and then we are closing like this.

So what kind of day do we have on the same type of effort?

As we attempt to go up, supply increases, comes in, and that pushes the

down. So bullish or bearish?

Bearish. It's not that it acts bullish. No.

It's trying to act bullish.

it it has an attempt to rally but it fails so uh it's not acting bullish it's

acting bearish it looks bearish and it acts bearish all right next bar number

24 uh slightly smaller volume signature but the expansion of the spread so ease

of movement on bar number 24 and we're still bullish Bar number 25, there is

some kind of vulnerability just because the volume signature increases.

And we could be expecting maybe there's going to be some kind of reaction to the

support level. Or we're just going to overcome this level, which we do on bar

number 26.

And bar number 26 comes on the diminishing volume character. So again,

producing some kind of ease of movement as the price goes up.

As long as the supply does not come or it comes and it's being observed, then

we definitely, most definitely, will be thinking that

Demient is still in the control.

All right. So bar number 27, again, we are producing some kind of vulnerability

because the volume signature diminishes and the spread diminishes.

is diminishing as well we are expecting some kind of reaction but we are still

in the bullish mode we need to see what kind of reaction we're going to have are

we going to produce a bar number like like bar number 15 or bar number one

supply is most evident then we would be saying that indeed the reaction is

taking place and more meaningful reaction is taking place and then

uh you know it could be something of a meaningful reaction and we would have to

think about our trading decisions to get out of the position to decrease and so

on so forth bar number 28 adds more to the vulnerability the volume signature

increases and the result to the upside decreases we should be expecting some

kind of reaction and as we go here

So bar number 28, let me just quickly see.

Analog bar with bar number 15.

Okay, well, let's look at this. Number 28 and number 15. Why those analog bars?

Well, because we are in the upswing and we're concluding this upswing

at 14.

And we're thinking that we might conclude it at 28 as well.

Bar number 15 relative to bar number 28 has somewhat of the same

effort behind it. And yet, what is the result?

Bar number 15 is expanding more to the downside than bar number 28.

Just based on that alone, we could say that we probably would be expecting a

reaction of lesser degree than what we've had from 15 to 22.

And that's kind of like a beauty of tape reading.

could go through the logic of reading the chart of reading the tape and we

deduct as to what kind of character potentially we could have for the next

all right so bar number 29 increased volume signature

and this is the highest volume signature since bar number eight or nine and

um with that we have a demand tail and the close is very close to the previous

closes or to the previous three closes so that is suggestive that demand is

present and it's absorbing whatever supply has become available on bar

and 28 so therefore our

expectation is that reaction is not going to be deep demand is coming in and

most likely with this type of price action where we are not giving up any

we probably just going to continue up and again how valuable this information

for us at this spot because the amateuristic trader is going to be

there is a diminished momentum characteristics which is true and then

supplies coming in which is true

thinking about what result is and what kind of

character of the result we have in these two bars you know would be probably

thinking that there is a need to close the position here because expectation is

for a much deeper reaction bar number 30 basically confirms everything what

we've seen in the last four bars supply comes coming in demand is capable of

absorbing the supply and the price is holding at this level continuation and

volume signature somewhat is diminishing relative to 29 28 and it's slightly

higher than the previous up bar so a very healthy bullish continuation 31

is a healthy bullish continuation because volume is expanding and price is

going up 32 produces an uncomfortable

situation for us because of the volume increase this is the highest volume

the initial reaction where we started our analysis so let's look at those

bars that we have and correspond them to the price action bar number four look

at the spread look at the close bar number one look at the spread look at

close and bar number 32

what is more bullish bar number 32 or bar number one and four

32 of course thank you guys why well

because the growth is not at the low of the spread and the spread itself is not

as large as those one uh and four bars and look at where we are closing

relative to the previous close right so this is the progress to the downside

close to close this is the progress to the downside close to close for bar

number four and one there is a huge difference there so even though

uh you know we we see that supplies coming in but we always

question what kind of result do we have the intention behind this bar is to

overcome the low of bar number 31 we are not even near that and i like this

comment by hamid uh you know he's saying maybe this is a preliminary supply this

could be right so supply is coming in and we know that preliminary supply will

always fail uh and the price will still advance to the upside okay bar number

33

It's basically what David Wise calls this bar is a resurrection bar.

And I like that definition a lot. I started using this in classes with the

references to David. It basically shows that whatever supply has come in, it's

been absorbed on bar number 32 itself.

And now with the increased volume signature, it's also being absorbed on

number 33.

and it's a favorable close relative to the previous close and we are very close

to the high of bond number 32 still bullish next bar to the downside

that supply is no longer in control from bond number 32 and we are closing

at the higher level um so which suggests again a continuation which happens on

bond number 35 uh so

not necessarily a breakout that we would be expecting on the slightly

diminishing volume signature and the dimension result but it's not bearish

either it's vulnerable to a reaction but we should see maybe there's going to be

a continuation to the upside which we do have and bar number 36 is interesting

that the effort is actually decreasing but the result is better than bar number

35 so an ease of movement is present and we are still in the uptrend at this

point of time next bar bar number 37 is a small spread relative to

bar number 36 and we are increasing the volume signature with that with the

diminished result characteristics that suggests that there is some presence of

supply and therefore we are somewhat vulnerable but still bullish

bar number 38 reminds me of bar number 32

where we have the same type of price structure of the spread and the same

almost equal amount of the volume signature so the effort is the same and

result almost the same we are still in the vulnerable position here but we are

still bullish And I want you guys to see in my notes that

my notes are reflective of how change happens.

It's gradual.

It could be very dynamically fast, right, if we have a lot of volatility.

But it could be also very gradual from bar to bar. There is some selling that's

coming in.

But it's not as strong.

it could be still observed on the excitement let's say by weekend and

still some buying that's going to push the price up and this is what we're

seeing in both bars number 32 and 38 vulnerable but still bullish

okay bar number 39 increased volume signature relative to the previous sub

bar which is 37 and then look at the result we are closing lower

And the close relative to the position of the close in the spread is much worse

than bar number 37.

So therefore, we've seen some kind of, again, continuation of that

vulnerability.

But the intention was to overcome specific levels, and we don't do that.

we're still bullish.

And the last bar in this exercise here is bar number 40.

We are diminishing effort.

and yet still going up so there is an you know some kind of ease of movement

the lower demand so still bullish we still have not produced the

between the increased downward effort and increased downward result for us to

say that we are done with this particular swing or this particular

let's retrace our steps a little bit bar number six confirmatory bar that the

upswing is starting bar number 15 is the change of behavior bar so here's our

swing number one bar number 22 suggested that there is a demand and the

confirmation comes on bar number 23 so here's your next swing and then we are

currently still even though vulnerable but still in the upswing you could

literally tape read and trade like this

Yes, it's very laborious. As you could see, there is a lot of work here, and

have to analyze one bar at a time.

But at the same time, these are daily bars, so they come every 24 hours.

And I'm sure that in 24 hours, you know, you could find the time to analyze

one bar if you are, let's say, following the market or following a specific...

stock or the futures and you could do this you could probably follow all of

positions and analyze them like this on the daily basis now when it becomes a

routine and you just go through this exercise over and over each day on

assets that you have not only is going to become easier for you to interpret

you're going to understand a better uh you're gonna understand uh better how

price moves the character with the uh with which the price moves and you will

much more accurate in terms of your entries and exits and your stop losses

are going to be moved more logically and your exits are going to be more logical

as well all right let's quickly see some of the questions here okay some

of the repeats so what's the intention behind bar number six okay so because

this is a bullish bar we want to overcome some specific levels of the

to the upside right so what are those obviously the high of the previous bar

the close of the previous bar so we're overcoming uh the close what else um

uh bar number 20 four could be interpreted as

intention was served but spread spread diminished um how

to interpret and wait uh this opposing findings from a ball well um this is an

still and relatively ease of movement right so we overcoming a meaningful

resistance but this bar is not contracting like bar number let's say

27 or ball number 37 um we probably did somewhat the same

at bar number nine um somewhat the same at bar number 13 so we are committing

above and the volume signature here is still relatively high so you should be

thinking here uh that there is a presence of the demand so therefore

is still satisfied

I agree, Brian. Yeah, so bar number 15 and 28, a very subtle comparison,

but at the same time, you know, it's a very proper comparison because those are

the analogs. This is where momentum diminishes, and our expectation after

vulnerability is that there's going to be a reaction.

But then, obviously, looking at how this area unfolds, you know, we could deduct

that the reaction is not going to be of the same magnitude. to. Good

observation.

Shayan is asking, bar number 30, would we be adding to this position here a

close or break of bar number 29?

Absolutely. This is a really good spot.

Why? Because as supply comes and we see a resolution of that

emergence of the supply, that automatically suggests continuation and

-on. that we could do so absolutely good observation cheyenne okay

was the intention of bar number 33 uh to close above the resistance of bar

number 32 again you could think about multiple points of the resistance here

right so obviously the high uh the open the close itself so we are

overcoming also the previous bar number 31 high and more importantly after bar

number 32 supply we don't have any follow through to the downside and we

still resurrecting to the upside so uh looks bullish uh more than bearish

all right uh meaning is asking with backing up action would you call the

intention to penetrate the trading range and judge based on the lack of the

supply or would you call it weak bullish volume that makes they're really

vulnerable or both so we're probably talking about this specifically bar

13 or number 24.

so 13 does not have that you know strong volume signature strong demand

and in a way because of that we have this reaction so the logic just you

know kind of like very fluid in this uh assumption that because the breakout was

not on the expanding volume signature but still relatively higher i mean if we

would be thinking about let's say these two bars right here or bar number nine

and we would be comparing them to the volume signature at 13 there is some

expansion in the demand just relative to what we've seen before here we could

say probably the same about bar number 17 and the breakout at 23

24 slightly higher but the way how the commitment happens right so there is

a relatively big progress off the resistance line itself

and 24 kind of has the same type of the characteristics um so that is

suggestive you know still of some kind of vulnerability that could come later

whether temporary or more pronounced.

And yet, you know, there is a commitment, which is very clear.

After bar number 23, there is no backing up action.

Is there any way to predict that?

Well, we are actually, you know, we could, you know, this is a little bit

advanced. So for those of you who are not familiar with this, we could look at

this as an upslope in trading range, right?

so this is what we're starting in the wtc phase c sign of strength oh boy

is there a backing up action i mean or not if you look at that from that

perspective then you could definitely find that and then you also could look

let's say you know intraday smaller trading rangers right so somewhere here

there could be a backing up action it's just hidden uh behind the intraday

action all right what else oh my gosh um so many

questions all right guys um let's move on uh uh save your

questions for uh next time uh when we're gonna go through some of the questions

let's go through the material uh we actually at five o 'clock so we'll

definitely go to 5 30.

and for those of you who can't

continue with this session uh we're gonna have the recording for you tonight

you could watch it later tonight if you're uh you know want to go and watch

into the night or you could do it later on okay uh we're gonna

skip this exercise number one i think that we're gonna go to

our material and see how many exercises i have for you actually Okay, so

contextualizing bar -by -bar tape reading.

And this is the key here.

Context is the king, actually, in a lot of things in life.

So as we go through, we've ended up right here on this bar.

This was the last bar that we've analyzed.

So what happens next? And we would have to go through this exercise, but we just

don't have time.

so let's just stick to the ideas here we need to understand the background of

what is going on and we were saying that the background was bullish for us as we

were analyzing this moves to the upside now something happens after

we register the high here what happens well um if we would look

here there's two bars on the increased volume signature are a change of

behavior bars change of character bars just because everything else before

does not have that type of structure of the spread that type of

expansion of the spread and supplies increasing at the same time so we could

expect that this swing up is done and this would serve us as an exit

and look how subtle that is look how subtle that is before a

big major move uh move down so uh

you have to be on the lookout and you have to understand you know where we are

in the context of this whole uptrend and this is a little bit more complex

picture because this is a more of the intermediate type of

climactic run that we have had here.

So we would be expecting a more meaningful reaction.

But as we change the behavior and we can't rally on the next two bars, that

suggestive of the continuation of the move to the downside.

Well, from here, we could conclude a couple of things. Well, first of all,

didn't put it here, a stopping action, a climactic action.

So we are trying now to define...

the context of the environment and the context of uh let's say a trading range

here as the price unfolds and it shows more of the range bound action

so a most definitive change of character bar suggests a change

of environment from an uptrend bullish to more of a trading range and to the

short -term bearish just because a change of behavior is still unfolding

The next bar looks like a climactic bar, so suggesting a stopping action that's

going to define some kind of level of the support.

And that level of the support is being defined actually on the next bar as we

first go down and then we go up.

And then further down the road, we see the bar that tests the climactic action.

would say that this is probably a secondary test bar that is confirming

action and right away here we could define the boundaries between the buying

climax and the climactic stop in action and the secondary test and we're

probably thinking that we are in the trading range as just a much larger

range so our expectation here if this is a trading range is that we are gonna

have some kind of rally to the upper boundary of the trading range to the

resistance and we're going to have some kind of reversal pattern that could come

as a lower high or a higher high and if this is a higher high then this is an up

thrust in the trading range and the way how we would capture that up thrust is

with the reversal of the last commitment to the upside

where supply signature is going to start increasing we're going to start seeing

increase of the spread and then we're going to see a change of character bar

that would suggest that we are done with this swing completely and now we are

coming back into the trading range and this is the whole structure now why do

need this again why is the context so important because

VSA signals that we are going through here, bar by bar, is actually,

would be interpreted somewhat differently.

And also, we could use the analog bars. We could compare, let's say, the

behavior of the price at the points of the resistance, the behavior of the

at the points of the support, the behavior of the price somewhere around

local. uh breakouts to the upside and to the downside and that would give us

some valuable information what is to come next and what is also the character

of the next potential move all right um so in the

analysis sequence what i would like you to do or how i would like you to think

about how you analyze

I want you to define the current environment, whether it's trending or a

consolidating environment.

Then I want you to define that Wyckoffian price structure.

If this is a consolidation, Wyckoff events and phases.

If this is an uptrend or a downtrend, what kind of a phase of the uptrend or a

downtrend we are in.

And then, only then, start applying the tape reading techniques.

Bar by bar, then swing by swing, then look at the analogs.

And only after that make your final deductions as to the bias, the timing,

the character of the next move.

All right, great.

Let's go to another piece of material before we go into the next exercise.

Let's talk about the analog bars comparison.

And why would we even do that?

Well, students always ask me, you know, What's this elusive character that you

talk about?

You know, you always say we need to define the character of the next move.

Well, imagine if we would know that the next move is going to be a very quick

momentum move that has some kind of verticality built into it.

Would we behave differently in terms of our trading?

Would we put more size?

Would we use other instruments?

uh if we're using let's say other instruments like options what kind of

expiration would we have what kind of you know strike price would we choose

so there is a lot of trading decisions

based on the definition of the character and when we are using the analog bars

comparison we could extract that information and deduce what kind of

weakness we have on a specific bar all right so here is an example of this

we're looking at the same sequence here and don't worry about the solution right

so some of you are asking will we have the slides that we keep to review uh by

ourselves that comes from alex yes absolutely i'm going to give you those

going to just you know see if we could still use this as an exercise in in the

next class

So what is going on here in terms of the analogs? How do we define the

analogs bars?

So I was thinking about the definition. So here's the definition that I'm going

to give you today.

Those are the bars that happen at the comparable price structural spot. So for

instance, if we're looking at the bars that happen close to the resistance.

and that are at the end of the climactic run or at the end of the upswing

those could be our analog bars because they happen at the comparable

price structural spot but they also we would like to see similar price volume

and momentum characteristics so for instance we could see how the volume

signature is somewhat the same these bars it shows dimension demand

characteristics in the climactic run and it suggests that we are close to the

top we are close to the top it might not be the actual top right so in both

cases we have the intraday top here we have the close here an intraday top

here but these bars are comparable and if they are comparable we

could probably make some kind of deduction

as to the strength or the weakness of what comes next well obviously as we are

expecting a reaction how would we make a judgment of the strength of the

weakness of the next reaction well we could see that probably barnum but two

here is uh holding much better and blue it's looking much better

uh it has a gap up this spread

somewhat better in expanding and we are closing at a slightly higher ground

above the analog bar number one.

So we are thinking that if we are gonna have a fully developed reaction, this

reaction is gonna be somewhat more bullish.

And this more bullishness in the reaction could be

shown to us in the character.

with which the price moves down meaning that maybe the spread to the downside is

not going to be as aggressive as we've seen before maybe the extent of this

reaction is going to be less and we're going to create a higher low maybe the

volume signature is not going to be as high as we've seen on the previous

reaction and therefore again it's a valuable information for us

to use in order for us to trade this reaction.

Okay, well, let's look at another analog.

We see a change of character analog on the change of character

bar. So here is one, and here is another.

So the reactions and the rallies are always going to develop in the same way,

where the change of behavior happens.

it's almost the same sequence is going to be present right so here's the

expansion of the spread expansion of the spread uh expansion of the volume

expansion of the volume so we see a slightly less volume character so

uh less effort to push the price down we also see that the close is more

favorable in the second instance than the first one so this is it's suggesting

that demand is present here so therefore again would the reaction number two

be somewhat more bullish or less bullish obviously more

bullish and again from here we are concluding you know that we could be

a high low that the character of the down move is not going to be as dramatic

as uh as we've seen on the first reaction

uh and that's exactly what happens next bar that we could compare acclimactic

analog bars okay well here is one volume signature here is a series of two bars

with kind of the same volume signature with the same effort now what happens

here we are combining two bars so spread wise it seems to me that they were

somewhat the same i could only make a distinction maybe a slight distinction

the position of the closes so a slightly higher low close but we knew that the

climactic action because of the character and the strength of these

are going to be somewhat better it's probably going to come on a higher low

and that's exactly what happens here high low also suggests a bullish bias

the stopping action So we're kind of given a bullish bias to this whole

formation right here.

Okay, so what's next?

Testing bars of the climactic action. So we see a continuation to the lower low.

We see a continuation to the lower low again. There's just a lot of momentum in

both of the reactions, so they just go drastically down to the lower lows, kind

of reminiscent of what we have had just recently in the Corbett reaction.

we want to see diminished supply characteristics and we see those and

how close all of these analog bars in terms of the volume signature it's just

uncanny right so but we know that the second reaction is somewhat more bullish

so again it's the position of the clothes that is different it's also

the spread itself somewhat smaller and again not only that we could conclude

that this is more bullish and it's kind of funny how we think about the reaction

that the reaction could be more bullish or more bearish but i want you to think

in those terms why because if the reaction is more bullish there is

an expectation that we might actually have a more bullish rally after that and

if it's more bullish rally we would be thinking that we could overcome this

into maybe like an up thrust sign of strength type of uh movement so

what we see on the chart is very logical because we could make a

judgment of what's to come based on the uh on uh the price action and volume

action that came before last one an upward effort off the test uh low

so off this low right here off this low right here and we've seen how um this

bar right here uh somewhat more favorable in terms of how that

uh rally off the test happens right it requires

more effort to produce the

result that is going in to one half of the test bar so we probably again

thinking here there is more ease with which the demand moves the price up so

what conclusion would we make out of that most likely that we're gonna have

expansion of the movement up and we're probably gonna make a higher high here

we're gonna do that then our trading tactics are gonna be you know somewhat

different

All right, guys, so this is, I thought, was kind of like a really good example

on the analog bars.

And specifically in the trading range, you want to do that as the trading range

unfolds. You want to do that in the uptrend comparing, you know, different

of the swings and different swings.

And then also in the downtrend, you can do the same.

Okay, so.

gonna assume that we're gonna go until 530 so we have 15 minutes left first of

all let me show you your homework so your homework

And your homework is not going to be about, like, define the bias. That's not

what we are doing here.

Your homework is going to be just to go through everything bar by bar.

So that's what we're going to do.

All right, so let's come back really quickly and let's just see.

Yeah, so we stopped here on exercise number one.

Yeah, 15 minutes is not going to do it, but let's just try.

So I'm not going to ask you questions, or maybe I will, so you just have to

of like see.

Alright, bar number one and bar number two.

Definitely a change of behavior from what we've seen on all of the bars to

upside that are down.

We know that we are done with this upswing.

At this point, this vulnerability only needs to be confirmed by a poor demand,

which comes on bar number three.

and which comes partially on the intraday on bar number 4.

Bar number 4 has somewhat of an ease of movement to the downside, so therefore,

that is a point of entry, and that is the suggestion that we're going to go

in a more meaningful way.

Bar number 5 negates everything about the uptrend that we have had

concluded before.

It's just the expansion of the... spread is so significant that it just

basically says, I'm done. I'm in a new environment. You should be closing your

positions if you haven't done so before here.

And then that leads to the climactic bar by number six, which has the massive

climactic volume signature.

Behind that is the hidden demand increase, which suggests a stop in

And again, Stopping action and change in itself happens gradually.

It might happen very quickly, but usually it takes time. Why? Because

as supply is increasing and demand is increasing, it's a collision between

two forces. And it takes time to absorb all of the supply by the demand.

And so it might take several days.

or even several weeks to stop the price from moving further down depending on

how everything unfolds. Bar number seven has that intraday move down and then

look at where we close.

We are closing at the upper part of the spread and we are overcoming one half of

the bar number six.

And we're doing this on the relatively high volume signature that suggests that

demand now is expanding at the exponential rate.

relative to what we've seen before and now it's producing the result to the

upside great so this looks like a change of behavior relative to the move

to the downside that we've had and it suggests some kind of trading range or a

consolidation with this trading range right here we're also thinking that

should be a test of the climactic action so here we go bar number eight

we have somewhat of a potential reversal volume is going down there is no

continuation to the upside so there is some kind of vulnerability uh for bar

number eight bar number nine increases in volume signature and because uh

we are testing the climactic action bar number nine should be compared to bar

number six and we could see that the

downward effort is decreasing as the volume signature goes down and we also

that the spread is decreasing and we also seen that the progress from close

to close is showing to us shortening of the thrust if from close of bar number

five to close of bar number six we have a good progression to the downside we do

not have that either from eight to nine of from six to nine so there is that

shortening of the thrust shortening of the momentum to the downside on the

volume signature that says that there is less selling at this point so we are

truly in some kind of secondary test attempt which is starting to being

confirmed by bar number 10 where we see the volume increase which suggests the

increase in the demand and we are coming

and we are closing favorably as well. Bar number 11, if we would have had

supply still present, bar number 11 would go down, but yet we have no

follow -through to the downside, and on highly diminished volume

characteristics, this is where we would say that supply is exhausted

and demand after the exhaustion is here. of pushing the price up with

ease.

Bar number 12 creates some kind of vulnerability.

We could expect some kind of reaction here, maybe a reaction to the downside.

Instead, that reaction is only on the intraday level.

And bar number 13 on the increased volume signature on the increased demand

breaks out this local resistance, breaks out above bar number 9 high,

breaks out above the highs of the previous couple of bars and suggest that

demand is in control at this point of time bar number 14 is just an ease of

movement and continuation to the upside bar number 15 is as we've shown

before in the similar situation has some supply which is less than what we've

seen on any of the previous declines and that still suggests vulnerability but

in a bullish context that we are going to have a reaction but most likely you

know that vulnerability is going to go away well where would we see that

vulnerability going away it's probably after bar number 18 where not

just the spread is increasing relative to bar number 16 it's better close um

and the volume signature is somewhat the same so we're producing a better result

on the local spring than bar number 16 and that suggests the timing

for the continuation of the rally continuation of the rally happens and

number 20 reminiscent to bar number zero this is where volume signature

diminishes and we are seeing that in the area of the resistance again

context think about where the signal comes diminished demand characteristics

could expect some kind of appearance of the supply just because demand is now

more vulnerable supply comes in at 21 slight increase and look right away

how it produces a much better reaction that what we've seen before of the low

of bar number 10 and that suggests the reaction where would we go well obvious

point of interest for us is the cluster of support between 14 and 18 and that's

exactly in a bullish scenario where the price would go we see that 22 has an

attempt to go up and then failure into the close on the same relatively high

volume signatures so still continuation to the downside bar number 23 is so

interesting because at the volume signature is close to what we've seen

so it's kind of suggestive that the weak hands are giving up on this position

here because they don't want to be caught up in the movement uh like we've

before so obviously from here they as they give up you know big

hands are going to come in and they're going to buy and we see that in the

increase in the volume signature that is suggestive that demand is present there

we also see this in the demand tail but because there is some significant

selling that is happening on bar number 23 the next move is still to the

downside on the intraday basis and then recovery on the next day on the

relatively high volume signature so again presence of demand and suggestion

the continuation now if we're going to continue

Not only we're going to test this high, we're probably going to test this high

as well, and we might overcome this high, just because there is an

this level.

And let's see what happens. I mean, obviously, 26 has some kind of

vulnerability, again, on the diminished volume character and diminished spread,

and that produces intraday reaction at 27.

but 27 has emergence of the demand and the closest favorable the closest

in the last six days or so 28 is of movement 29 even

more ease of movement but you know as we've discussed before uh and it was

evident you know ease of movement is favorable for the continuation unless

you're gonna start having supply coming in on these diminished demand

characteristics so we're seeing diminished demand characteristics

last leg up into the up thrust condition we said that contextually we probably

in some kind of uh in some kind of trading range so

uh momentum is slowing down demand is diminishing and then on bar number 31

what happened supply

vulnerability tuning into a bearish reversal on bar number 31.

to confirm this bearish reversal we want to see an ability of the demand like

we've seen it here in this area to try to rally and to fail and we

do and number 35 becomes a very bearish bar on the expansion of the result

to the downside

So here is another exercise for you.

Alright guys, so I'm going to give you a different exercise as a

homework that I thought that I would give you just because we haven't gone

through this.

I want you to analyze the next sequence.

And here it is.

here is the solution here when you do this exercise i don't want you to look

the solution so you know be honest to yourself first of all and don't look at

the solution try to go through all of these bars bar by bar and do the same

of analysis and only then compare it to my notes i might have some mistakes here

because i was working you know uh really hard through the last you know two or

three days to put this material together and there is a lot of details here so

if you find the mistake let me know i would gladly look at that and if you're

correct i'll correct my mistake so i'm gonna give you three charts

this chart right here

this chart right here and this doesn't have a solution

so this is more appropriate for the homework and this is just a continuation

the same uh price sequence and then this chart so you will have to analyze 40

41 so that's 81 and 35 so that's going to be what

116 bars so pace yourself because

116 bars you will have to sit down and at least have I don't know, maybe a

couple of hours for sure.

And that would be your homework. Go bar by bar, analyze each bar, compare those

bars to either the previous bars of the same bias, or maybe you're going to

find some analog bars, compare those to those bars.

And then, obviously, we'll review the solution, and it's probably going to be

self -review.

as a solution for the next uh for the next time questions comments let me just

see some of the questions that we have here on this exercise

Bar number two.

Am I reading this correctly, Leonardo?

Bar number two is the climactic analog.

I would see it as an ease of movement bar.

So I'm not sure what is going on here.

It was on the first slide. Okay, so yeah, let's just discuss the questions

this slide. Okay.

There were three bear bars after the first bounce of the downtrend from

C -Shan.

And the last bar had a large volume spike. Are we discussing this, guys,

C -Shan, are we talking about this slide?

Let me know.

Yes, 23.

Okay, so bar number 23.

Is that the bar, C -Shan?

Okay, so there were three bars, bear bars, after the first bounce of the

downtrend, and the last bar had a large volume spike. Would this be considered a

change of character at the moment of happening?

So how would we view this bar?

The downward pressure is increasing relative to bar number 22, and the

is increasing as well. So our simplistic interpretation of that is that it's a

bearish bar.

But, as we know and as we've talked about,

volume spikes are going to have this type of the equation where supply is in

control and is increasing, but there is a presence of demand and it's increasing

as well.

This bar is going to suggest stopping action, suggest a change of

behavior to come, suggest some kind of reversal to come.

Suggest maybe a trading range environment.

Bar number 24 confirms that demand is present and now demand could push

the price up. And bar number 25 confirms that now supply is not

in control and demand on smaller effort could push the price up.

So it's a sequence of confirmation. It's not necessarily a specific bar.

you could have different levels of the confirmations that could come uh you

confirming that demand is present demand is present here and that acts you know

this acts as a confirmation having a tail uh on the level of the support with

the increasing volume signature next confirmation bar number 24 the demand is

present increasing and could push the price up number 25 there is no need for

extra demand because supply is not in control okay

france is asking if we want to enter on the test then setting a limit by below

the low of bar number seven um if we

okay so where are we entering on the test so uh yeah sure uh i would i

would definitely consider that on you know these two levels one and two i

france that uh it's logical here to use the climactic low because if we're gonna

travel uh even just to the height of the trading range uh then the climactic

action could act as a you know logical place uh you know to place the stop loss

hey next one from jeremy How do you see the

reaction at 21, 22 compared to 1 and 2? And I think that

we've talked about this a little bit, right? So look at the volume signature.

here the volume signature, somewhat comparable, but I would say that it's

interesting how, you know, we have selling off the top.

number two here actually has a little bit more selling than bar number one we

would be thinking here that comparing just the spread that maybe

this reaction could be a little bit more significant and obviously when we

make this type of assumption on the what kind of reaction we're going to have we

also have to wait and see what actually happens Because as demand comes in

around this area, we could stop that movement down. We could stop that

And actually, I've seen this mistake just recently, you know, this Tuesday in

the practicum, where our students were thinking about the synchronicity with

which the effort increases and the price goes down. And then they were expecting

a much more meaningful reaction.

And it didn't come. Why?

If demand comes in and observes the supply, it's going to stop that

Do we have the emergence of demand on the next bars, on 4 and 5?

No.

If anything, supply is in control and increasing, and therefore suggests a

continuation. But this is a really good catch, Jeremy. So, you know, kudos to

you.

Sam is asking, would the last commitment to the upside bar would be bar number

30 or 29?

Technically, the last close is the commitment up, but the commitment of the

significant bar obviously will be bar number 29.

That's it.

All right, guys.

So somebody was asking to show

the 40 bar exercise again.

Okay.

Sure. Let me just go there.

41 bars, 40 bars here.

Okay, so what are you guys supposed to do? Well, first of all, lots

of material here.

So your homework number one is maybe to re -watch...

So I'm going to put this in a separate file as a homework.

This is going to be a PowerPoint file.

So you could just, you know, have those definitions of the effort and the result

and what you think this bar is bullish or bearish and just,

you know, write those down and that's your homework.

In the next class, we're going to be discussing swing analysis.

So bar by bar is very meticulous in terms of how much we have

to think about each bar, what bars are we going to be comparing.

Swing analysis is going to be somewhat easier but also a little bit more

because you will have to think in the context of the whole swing up or down

how do we compare those to each other based on the context of the environment

that we are in.

So, but obviously also a lot of fun.

Okay, well hopefully a good start for us. I'm feeling excited and still

you know, that we went through such a big body of the material and we've done

lot of the exercises.

Don't be lazy and actually do the work.

Print out the homework and actually go through the chart bar by bar.

Do yourself a favor.

You know, don't waste your money just listening to me. I can do this analysis

because I'm doing it every day and you guys have seen me do this, you know, in

so many classes.

I want to push you to do this. You know, even 30 minutes of exercise

like this where I'm giving you the chart, I'm going to give you the

please do so and, you know, improve your skills.

all right guys well with that that's it for today i'm gonna see you next

thursday have a wonderful weekend and a happy trading thank you guys