Original subtitles

and this is session number two and session number three official sessions

uh for series number two of the tape reading course that was uh that i was

supposed to do together with david weiss um and we are combining these two

sessions originally we thought that you know i'm gonna conduct monday tuesday

class but you know it's been a long year

just want to be done with all of the classes i was kind of hoping to be done

by last friday um and uh so because the sessions david sessions are

hour and a half that's what he requested um you know we're just gonna kind of

like follow with that and we're just gonna combine uh two of our sessions two

and three in

session with david that's number one uh bonus session number one

and bonus session number two and then you're gonna have this three hour

class that combines session number two and number three so you're gonna have

five sessions uh instead of three and i hope that this is sufficient um you know

in light of the circumstances that we're going through with david

And, you know, hopefully that's going to be enough. There is no substitute to

David whatsoever.

I mean, like, there is nobody in the world that could give you the

that he contained.

And, I mean, like, all of the teachers, we realize that. I mean, like, we can't

really give you guys exactly what he was supposed to give you.

extremely sad, extremely heartbreaking that David

is not with us.

It's kind of, I was talking to my wife, it's kind of a little bit hard, you

know, when you work with the person, and I've been working with David this last

year, this year a lot.

same feeling or not um that's just kind of like what i feel um because i mean

like even uh from his hospital that he was communicating to me and to us and

he was saying like you know roman you know don't worry i'm gonna get back i'm

gonna you know we're gonna cover those two sessions so just kind of like stick

with me and i'm like don't even worry you know like uh we'll launch william

first and you come back and everybody's like on board for January classes, and

just unfortunate how it all happened.

I had a chance, as I mentioned, to...

How's the audio, by the way? I can't hear

you today.

Is the audio okay?

Yeah? Okay. I'll speak up.

I'll speak up. Maybe it's just me.

So, but if your audio is you're not catching something, then definitely log

log in back, and you'll have that.

So as I was saying, I had a chance to work with David a lot this year.

My first encounter with David was obviously through the material that he

providing.

of Waikos at Golden Gate University.

I actually did not attend that particular conference. I believe it was

And Bruce sometimes, you know, talks about that particular conference.

Hank and David definitely knew each other well.

Hank spoke about David, and David obviously, you know, in my conversations

him, spoke about Hank.

he had very fond memories of him.

David was a very instrumental person in

the Wyckoff method.

If, let's say, SMI, starting with Bob Evans after

Richard D. Wyckoff's death, if Bob Evans was

kind of like this very, very structural guy, right? So he was taking the

concepts and he was trying to structurize and give all of the

spots some kind of name. So some of you might be surprised that, you know, when

I would say that Wyckoff actually did not have any phase analysis.

I mean, like, literally, it's not Richard D. Wyckoff's...

work. It came later on from SMI.

Wyckoff did not have a definition of the spring.

He had a definition of a shakeout and a terminal shakeout. So those type of

things that we were grateful to Bob Evans, you know, to put on paper, to put

tape, echo tapes, I'm sorry, and

So his work predominantly was on the structure, and I think that's what we're

grateful for, for Bob Evans.

Whereas David, obviously, a next generation of Wycoffians. So to me,

Hank Pruden, Tom Williams, David Wise, and Craig Schroeder, they are kind of

like one generational layer of Wycoffians who did different things.

So David had a very unique approach.

of the methodology.

He approached it more from volume and price, tape reading,

supply and demand,

swing analysis of the, you know, or analysis rather of the effort versus

in swings and in the bars.

William said in the previous session on Thursday, he modernized, you know, the

tape reading approach, you know, taken from Wyckoff methodology

by bringing, you know, his David Wise cumulative wave, by looking at the

effort versus result on the swing, and also working

a lot with PNF and Renko.

So, that was probably the most prolific contribution

by David, you know, to the methodology.

And then, obviously, you know, his character.

For those of you who had the chance to work with him privately, and David most

of the time conducted private sessions.

of lucky and i was just unbelievably grateful to david that he agreed you

to have these classes and uh we were just very excited and um what do you

we only have one session with him but this is the session that you know we'll

definitely cherish at some point you know maybe in a year we'll put it on

youtube channel as a free session just you know to remember david that way

His character was of, and this is just coming from me, but I'm sure that

you could relate to this, you know, those of you who have taken even a

session. He was very generous.

He was very generous with his time and he was very passionate about his work,

about looking at the charts.

And I started working with him in January of 2020.

So right before...

of wanted to build a closer relationship with him because obviously he he's such

a big figure and you know I've realized that even at the level that I am

I still could be mentored by a great teacher like David so I had

throughout this year almost 30 private sessions with him that I went through

we did a bunch of different exercises but

know what it is maybe it's just kind of like a camaraderie that we had that we

shared we laughed a lot when we looked at the chart and I

mean obviously being both so curious about what's going on in the chart it

kind of fun it was a lot of fun to just you

know go through the analysis with him where

okay well what's the deduction out of that you know like this seems to be of

this character and this moves you know like and so on so forth and one of the

things that he was commenting and i mean like it's kind of pretty obvious he was

like you know uh like in the middle of the session he was like i don't have any

material for you anymore and i'm like how come and he's like you're just going

too fast um he's like your analysis is so fast and i think maybe it's just

a function of the classes you know that they teach where i have to like go

really fast right so um or just slow down you know it just depends on the

like wmd is always like you know like we would go like through 30 50 charts in

that class um but david really enjoyed it um and so did i because in a short

period of time that you know we had together we were able to go through a

material number one um and i think it's just because

he really didn't have to explain a lot and we were just enjoying kind of like

looking at the charts and kind of analyzing and he was kind of mesmerized

with some of the pyramid techniques that i had and he was always like well i

wouldn't do that but it works and it's just amazing how you do this and so on

forth and obviously i was trying to figure out how he did

And he wasn't an extremely active trader per se, let's say the last year, but he

was chasing this trade in court. And, you know, he was talking about in

and he was talking about the history. And I mean, obviously, I'm also kind of

like, you know, a chart history nerd. So I was always like, OK, let's go show

me, you know, where did you trade it? You know, why did you why were you

thinking this way at that time?

and we were just talking about the history of that corn trade and then

it comes and he's like this is it and what a great call what an amazing call

like you know i i kind of experienced it from from the master himself

um just kind of thinking about

how he was approaching the selection and

he was already you know so set on the bias and it was interesting that both of

us were kind of confirming the same trade because i was talking at the time

lot about agriculture and commodities in general so going into summer it may it

was obvious to both of us that agriculture in general and including

are just going to reap through uh you know off the lows considering you know

intensity all of the institutions had of the COVID low.

So that was a great trade.

He was also, you know, we kind of became

a little bit personal with each other. And I was hoping, you know, to go to

Boston because my daughter goes to Boston, one of the Boston universities.

And David leaves.

in the suburbs of Boston.

that i'm gonna come and um you know he was saying like yeah i'm

gonna take it to my favorite restaurant um and because i'm a little bit of a

food um a foodie and uh so we were looking towards

that and uh obviously will never happen um but uh you know he was giving

himself all um As a teacher, as a friend, as a mentor,

I had a

very tough time

when Hank passed.

And this year with David kind of got me so close to him.

so on so forth it's really hard

to let him go so the best remedy that i

found with hink because that was also such a huge loss for me personally

is just to remember them you know and we should remember david we

will david's book is

And that book will stand, you know, it will stand the time. Many students of

the market will read that book.

And I will make sure that we do here at Wyckoff Analytics.

You know, we've already kind of been doing that, but we'll do that more.

I want you to know that also...

david's family and i only had a chance to know his wife karen um and

by knowing i mean like i have corresponded with her i talked to her

um in the last couple of months so i know her from that but i've never met

and he also has

very very sweet people and it would be tremendous if all of

you those who had a chance to work with David or even you didn't have a chance

to work with David and maybe you just read his book and it impacted you so

deeply profoundly you know write us an email with your memories of David and

your work with him and I will collect all of those emails I will put them into

some kind of know pdf or i'll figure it out and i'll send it to canada and the

family i think it would be nice for them to hear

from his students and i'm sure they are receiving a lot of emails but you know

just kind of like in one um from from another source from one source um

so if you have a chance uh you know definitely

we'll get it together and we'll forward that uh to the family all right um

i think probably that's it

uh i can't think of anything else right now this is probably the first time when

i kind of like let myself talk about him a little

bit more like you know in the extension

thought that I have about him and yeah, I'm kind of a little bit lost

with words.

You're such a great man.

Okay, what are we going to do today? Let's just kind of like concentrate.

Okay, so today we're going to have throughout the whole session, I'm not

questions I think it's the one of the most important teaching and learning

that we could have question and answer now you can do this in different ways

specifically for this class what I'm thinking is I

want to have all of the questions on the agenda and then as we go through the

session

then I will try to concentrate on some of the questions that relate to that

material. And obviously, we want to, it's still David's session, so

we want to go through some of the David's material.

And therefore, we're going to talk about his book and what our students here at

Wyckoff Analytics did with that book, how we

could work with that book. It's a very important...

understanding for us how do you work with that book you can't really just

it you have to study it so we'll talk about that and then we just we'll do

practice exercises as always

is for educational purposes only so stop the recording read a disclaimer in full

so let's do those q a

inquiries let's just go through some of the questions

so um let's figure out

what kind of questions you guys have so type those in i'm gonna copy paste them

kind of like as i do this i'll think about you know what are the appropriate

know moments uh that we could go through uh those questions and uh some of the

questions you know will definitely go through at the end

of the session and some of them during the session okay so here's

the first question

all about david's work david wise indicator and how it works can you

it's volume indicator yeah we could definitely go through this okay no

bar and think about any questions that you have on tape reading and chart

reading by the way those are two different things tape reading and chart

we can talk about this as well okay so

some questions are coming in that are just

david's work so i'm gonna separate those okay what else guys

What is that? I don't want to even make any assumptions there

Reservation bars from David's work

absorption we'll talk about this today absolutely okay

volume profile um okay horizontal volume was that the amplitude that

view various spots at the edge of the trading range first okay so tactics

okay

footprints show the beta versus ask volume at price level in the

in the bars and show balance on balance of orders oh i see okay so that

is the you know the delta volume right

Probably not going to go there because this work is a little bit, it

requires a little bit more thought.

Ironically, I was just talking about this with somebody this week.

There is definitely some interesting things.

The majority of that work is on the very, very low time frame, and I just

have time for that.

Timing is always an interesting topic. I'll only think that confirmation for

entries. On sharp moves, some situations...

talk about this relative to david's work how does volume and spread ratios

detect

five minute chart today the reversal was very interesting so today's market yeah

definitely we could look at that if we have time so and by the way i just want

to say that um you guys are you know such great

students um we received a lot of good feedback from you uh regarding this

um so one of the things and by the way for those of you who did not

with william uh that was a blast as well i mean um every

every teacher that i worked through this course with um was awesome in his

own way with william i just have such a great

way of interacting and we're so similar but yet the styles

are different like our analysis is the same

the chart in front of me that they didn't know it was oil some intraday

and we went through that so that was very interesting and useful to students

have received a lot of feedback on that so i just wanted to mention to those of

you you know who who did not uh purchase the series number three i think it's

definitely worth it for for those of you who are serious about tape and chart

reading

we probably can continue the same way you know teaching

traders you know in that type of format so what we're gonna do in January is

we're gonna create what we are calling the tape reading lab

this is the place where William and I which is gonna come and we're just gonna

analyze

you guys through this interaction and constant like you know bombardment of

you know of the charts with the analysis with our views and

deductions you know we'll we'll definitely update you on what's going on

current markets from the tape rigging point of view and also we'll go through

the last week and we'll kind of like stop at interesting places and we'll

about the analysis and the tactics and also we'll show you some of the trades

you know that we did or so on so forth so i think it's going to be highly

interesting because kind of

kind of worked out miraculously this way so i think there is a lot of value so

consider that okay next one uh is there a way to detect net selling and buying

at the edges of distribution

In David's book, he has drawn a P &F chart with this volume inside the boxes.

This is the ultimate P &F chart to trade from the intraday.

Really great perspective, David, and we will actually go

through that chart today.

So that was in the works.

David talked about backing up action was very low line, similar to what Radon

talked about in his presentation, Springboard.

question there uh tests and whether we're testing supply demand based on the

context okay interesting okay

uh could you tell a bit more

about the chart reading lab and how to get the enrollment information i'm very

interested um yeah so guys we will send you the information so don't worry uh

because william and i This is kind of like a very fresh, raw idea.

We just kind of felt, both of us, like we want to work a little bit together

more.

And I think it's going to benefit our community.

So I think that we're going to start somewhere mid -January, end of January,

which I just need to launch the whole semester.

And then once the semester is launched, then we'll...

We'll start working on that. It's going to be on Mondays at 9 a .m. This is one

thing that William and I have discussed because both of our schedules are

somewhat packed.

But it seems to me that having that session during the U .S. session

is appropriate.

We picked up the time specifically when the...

pacific um and then the rest you know will send you the details okay i think

that's it you know for the question so what i'm gonna do is i'm gonna keep

questions in front of me just in case uh

some question pops up and um i will definitely

the material.

So first of all, you have to look at, you know, the whole structure where we

are.

So let's just say, let's start actually with the daily.

So we're in some kind of this backing up action slash up thrust.

It's always important to understand that you have to think about scenarios,

right? So sign of strength or up thrust.

Either a sign of strength is going to be, you know, holding.

and then we're going to have a backing up action or up thrust is going to

and we're going to see that action well we kind of negated up thrust at this

point why because the price overcame the resistance of the buying climax and

actually stayed there for quite some time right so we have one close two

three four uh then another one right here um so around four to five

closes what do i call progressive closes that they progress up with the new

higher clothes um that kind of clears up on the previous commitment to the

upside so usually that is the indication of the sign of strength it's an ability

of the price to stay above the resistance which is extremely important

know that it just shows that there is no selling or strong selling and yet if

the selling comes you know that ability to stay above the resistance uh shows

the capacity of absorption so for instance right here we see how on this

supply has emerged that comes from the increased effort

and also from this tail that we see at the point

of the resistance from the buying climax so selling definitely came at that

point and the biggest question when selling comes what's next is there going

to be a continuation down attempts to go up and then a break and this would act

as a confirmation that we are completely done so something like this where we

have selling occurs and then there is a you know intermediate failure

on the way down but the confirmation of that comes here when the price breaks to

the downside the same you know this is a late confirmation and there are a

series of confirmations that we see along the way but this is probably the

most strongest confirmation where there is just this uh capitulation of the idea

that the price is gonna go up so we still have to experience it somewhere

confirmation of the break let's just say it i'll put it this way but initially

on this bar right here we definitely see a path that shows sustainability of

that move that showed absorption right away of that supply we're seeing how

supply comes in what does the next day show us relatively high volume signature

that is happening on the small bar

Bullish or bearish?

Definitely bullish.

And it shows that there is some absorption of that supply.

Well, if we are not sure about that, how about the day after?

So, the day after, if we would see some kind of emergence of

selling after the...

successful task and day then we would have attempts to go down or the price

go would go down but it doesn't and actually on a smaller demand

signature look how how small this volume bar is

we're seeing that the price is evil

this is a higher close than the close of that supply day so what does it tell us

it tells us that the price could move up with more ease ease of movement and we

could call this an ease of movement day and ease of movement is usually

indicative also of the supply if we're talking about the demand how come well

what does it tell us about the supply it probably tells us that supply is

exhausted or observed and those are

two different definitions absorption and exhaustion so we have to remember that

so on that day it just kind of like shows to us um you know it's it's you

supply is um has been observed around these two bars

and what was important about absorption of supply at this level is that it

happened at the level where previously supply has come with some kind of

presence right so on this bar specifically there was a lot of supply

this was a change of behavior bar and then right here was a small climactic

in of this upswing that also had some supply behind it not

as much as a previous supply and i really like this price action why um

if we would be thinking about the timing of the price getting out of the trading

range we would be thinking that absorption first needs to happen at the

level absorption number one then it has to happen at the higher level

we also need to think that the timing will always coincide with the supply

present.

So what do I mean by that?

Well, imagine that the price cannot

really leave the trading range unless the majority of the supply has been

observed.

supply available, supply of shares, and they have the capacity to capitulate

that supply and present it to the market. And that would produce a

But if that supply is taken from weak hands away, then they cannot do this

anymore.

They can put on a short position, but it's not the supply that they have had

purchasing the shares and then selling those.

So the whole idea behind the composite man, composite operator, and the

absorption is that composite man just collects the supply, puts it into

its vault, and then does not present it to the market for a certain time.

And during that time when that supply is not available, the price is able to

create some kind of uptrend.

what's going on with the absorption and the composite men and so on so forth but

for you the most important thing here to remember we want to see the absorption

of supply in the trading range at two levels we want to have the absorption at

the lower level and we want to have the absorption at the high level so what was

so encouraging with this bar is that supply occurred and then it didn't want

go down so it tells us that instead of supply occurring

and then we have movement down we have here more of

the testing period which suggested continuation to the upside and that was

of the call at the time what was also important on the micro level was

the next bar so the next bar showed

That selling has diminished, right? So, for instance, from the capitulation

selling of this level right here, throughout all of the red volume bars,

see how the volume signature went down. So, selling was

left at this point of time. And that happens also at the high level of the

trading range. So, that shows that selling has been exhausted.

support level but also at the resistance level and what was the result of this

bar that was the most important question and this is something that today we

will be talking a lot about it didn't commit below the previous bar low

which is important and this bar actually had some commitment to the upside

relative to the bar before it did not commit below

So this big bar contained the price action for the next three days into this

bar.

And therefore, the result was non -threatening bullish result, which was

normal reaction on selling that was left and left.

And that was happening at the point of the resistance. So we were expecting the

move up.

Now, as we go, and I said that there are quite a few bars where you could... see

that commitment to the upside over previous significant bars and that is

functionality of the sign of strength it's an ability to stay above the

resistance even when supply occurs you know we kind of still stay there so

four bars four days were very interesting in that perspective because

into them everything looks okay

came this high of what we would call an upthrust probe.

Why do we call that?

And I believe this is Gary Fullett's semantic, but I'm sure that he

probably took it from somewhere else as well.

We are probing higher prices, and we would like to see what

kind of supply is coming in at that level.

We saw that. We saw that absorption.

And now we're at the higher level. So once we get to the higher level, look

supply increases.

So there is definitely some selling. And I think it's purely associated with not

even the stimulus package that was kind of supposed to happen, was bound to

happen. It's more about, again, the wave of COVID -19 infection, death

rate that we have throughout.

you know, the whole world, lockdowns that we're seeing that basically

business and influence the revenue.

So I thought that, you know, this is the volume signature, you know, for that.

What was disturbing today in the market is the way, you know, how this bar

unfolded. So, and we'll definitely have a look. But just to conclude our

analysis here of the daily chart, for the bullish case scenario,

Because we've seen how supply is present.

And when supply is present, we always think about the result.

What is the result? It looks like we had a lot of buying into the end of the

day. And that buying brought the close, you know, still relatively at the high

level. It's higher than the, you know, upthrust growth right here.

But the failure of this bar will be significant.

what's going to happen next is going to be very crucial so this week and next

week we will have to see if we're going to start failing here and start going

down we definitely have an

opportunity even to come back to the trading range back to the trading range

the most important support is obviously

a support that held multiple times and became a significant support but we also

have the support where absorption has happened prior to this right so to me

level right here around 3500 that's the most important level right now to watch

whatever happens in between you know of where the prices were let's say at 3735

this is all you know consolidation, price movement, and so on and so forth.

35, this is where absorption has happened before. 35, this is where the

selling has come.

This is something that I want you to concentrate on.

So let's now go to the five minutes and see what kind of trades we had there

today.

I wasn't trading today.

But I think that the most significant thing, I should say I wasn't intraday

trading today. I'm still, you know, falling over 50 positions that I have

currently, but in different timeframes, swing and long -term campaign positions.

But sometimes I intraday trade.

I like intraday trading.

The structures, you know, kind of give you... The intraday timeframe gives you

an opportunity to... practice structural analysis you know supply and volume

obviously much faster so you know the feedback comes to you in a much

a much faster way and obviously you know when we have a good move you know it's

always a good money what was interesting about today is what happened after the

close of the u .s session because at this moment right here on friday it

bearish on the daily chart

But yet, this rally into the close spoiled the whole bearish look.

But then look what happens afterwards. Right away, on opening Friday night, we

are going down.

There is no lift.

And then a sign of weakness, LPSY.

That looks like, again, a very weak rally suggesting a downward movement.

We go for a right overnight.

And again, there are a lot of closures in Europe, specifically in the UK,

London, and so on and so forth. So it is more related to that market, and

we're seeing this reaction.

as this reaction so we would be comparing it and as i was kind of like

the market um i was thinking this was a really good point of entry right here

and it reminded me uh of a trade that i did um i believe on thursday

but that was with neotech so let me just quickly show you the structure

i'm gonna show you that on let's say one

So we're seeing here for NASDAQ, and S &P had a slightly different structure on

that day.

That first initials attempt to go up, fail, sign of weakness, LPSY, kind of

reminds us of what has happened today in S &P, right? And then we have like a

waterfall here into the climactic action, selling climax, and then the

recovers, and then we have...

of the same magnitude as the capitulation let down so what do we see

structure in the context of the volume signature and the structure itself this

type of action into phase c and then recovery and then continuation

the volume signature went down supply decreased dramatically

so look at

the supply we have after a climactic action we have twice as less

supply and it doesn't produce the you know a favorable result for the bearers

creates a higher low we also look at the texture of the decline and we see that

the spread is diminishing relative to the capitulation climactic run so that

a very bullish sign so my trade was opened right here

So it kind of reminded me of today's price action, where we've

seen the same move down, second leg down into phase C,

which is a high, a low.

And from here, you just go up. And I thought that that was a very interesting

recovery today, you know, everywhere.

And obviously when you look at something like Rothwell, that was just

incredible.

There's just a lot of points there within the intraday structure of the

the European session low.

So that was a relatively easy trade to make.

structure that i showed you i made a saying recovery sounds laborious so

laborious well yes um you could definitely say that i mean we're talking

this but you probably have to think about the recovery of this flow because

you would be thinking you know the recovery how it happens first of all we

to acknowledge that there was some buying on the way down we see all of the

sales here then look at the momentum of the first two or three waves um

there is a lot of momentum right there right so uh it's not like the recovery

started with not a lot of momentum and then after the initial move

down in the us session we still have

of the abnormally after the after us option all open because you

usually want to see this type of volume profile during the us session

and this one had you know these bars these bars right here so

whenever we see abnormality like this we always question you know why what's

going on here well look at the result

that's the most important thing what is the result of the bars that have that

type of high volume signature well we don't have a really good progression to

the downside and we are just kind of bringing below this

support level and recovering right away so this feels

like a spring with the

into the account the magnitude you know the texture of the decline there was

really like very heavy selling only on one bar and then after that everything

diminished in terms of selling and i thought that that was a really easy uh

trade today to the upside now i think i made it talking about this

that there was some buying let's say in this area right here after that there is

no aggressive buying we see that from the volume signature and we see that

from the spread action as well but what's important is that to understand i

is that we bought here they were buying on the way up here there was um

definitely buying in this area right here

So we saw buying, buying, and then after that, that buying exhausted

supply.

And when supply is exhausted, look at the volume signature. This is what we're

going to have. The volume goes down, and supply goes down.

And because supply is exhausted,

can go up without a lot of demand so we could say that both supply

and demand were exhausted after selling and buying buying has won but because

both exhausted you know in in that in that moment of buying and absorption

we don't have a huge volume signature in those type of cases we're going to say

that there is some kind of ease of movement as the price goes up. With the

of movement, the main thing in tape reading and in chart reading is just to

recognize that indeed the price progresses to the upside.

Can it overcome, let's say, the last commitment to the downside?

Yes, it can. How did it do so? Because we don't want just, you know, kind of be

at this very basic level of understanding that, you know, there is a

We need to dig a little bit deeper.

How did it break out?

Did it extend way above the breakout area or not?

And I would say that this is a very good breakout. It also had a marginal

increase in the volume signature that suggests that demand was increasing and

pushing the price up.

Okay, well, what is the next level for us to overcome?

Probably this bar.

You know, this was the most important bar today in the U .S. session.

It needed to be overcome.

So we're seeing aggression of the breakout that brings us to about one

that bar. And that's important because we know that, you know, there will be

instances when this whole down bar will be covered by one bar because there is

so much demand.

But demand has exhausted itself already.

Demand has bought in quite a lot of supply.

So to me, this bar showed some aggression after the exhaustion by the

itself. To have this capacity to break out like this and also to cover one half

of that capitulation bar was impressive.

What happens afterwards?

Do we go down or not? We don't. And even when supply, marginal supply comes in,

we're quickly absorbing that so we're seeing the absorption at a slightly

level of the breakout and tape reading is really or

chart reading is really about the unfolding picture

how to explain that you

could have a very definitive let's say point of entry

happens afterwards is that um you're basically answering the question about

about the follow -through after the point of the entry after the breakout

the reversal whatever signal you are you know using there is there going to be

enough follow -through for the price to continue its movement in the direction

of that entry so you kind of start creating that spike of you know or tape

-reading, chart -reading story as the price unfolds. And your goal as an

and as a trader, as a tape -reader, as a chart -reader, is just to follow that

story. And when the story starts to do something else, it kind of shows

a different picture.

That's when you understand that the change of behavior is upon us, and maybe

even something more profound is the change of character.

collapse of the structure is going to happen so if we would like follow this

story we could see that the breakout has happened it acts as a confirmation of

the reversal and buying that we we saw at the beginning of

this move actually into the end of this downswing and then a testing

so we're not going through the analysis of all of those bars but Those are the

bars that show that conditions change, that change is happening now.

Absorption at the higher level, then after the absorption, do we have a

continuation? Yes. And we need to overcome this level.

Do we do that? Yes, we do overcome it. And look at what we do when we overcome

that level.

The bars are not expanding, and the volume signature is diminishing.

Initially, you would be thinking that's probably a deterioration of the demand.

And you would be absolutely correct.

Why? Well, because the result, characteristically, is showing

that it's diminishing.

And therefore, we should be expecting some kind of reaction.

So, what kind of reaction do we have by overcoming this level?

This one and this one.

And then in between those two reactions, we have a bar that actually propels us

up. And that closes at the higher level than the high of this big capitulation

bar.

Characteristically, is it bullish or bearish?

We were expecting a reaction from here.

It came as 1, 2, 3 or ABC structure, but it didn't go

below this.

So, therefore, this reaction shows bullish characteristics

and suggests that supply is still

exhausted.

That suggests continuation.

And how do we continue? What is the next thing that we need to do?

Well, obviously, we need to overcome the next two levels.

do we overcome this would tell us what's going to happen next would you say that

this was a very strong breakout i mean relative to this first level i would say

yes right so we're committing first above um you know maybe not as much as

here at the beginning and that is also suggestive you know that breakout you

know a commitment of the breakout suggest that even though we're gonna go

It's not going to be as dynamic rally anymore.

And we probably need to tighten up our stop losses as we go into the conditions

that are going to be, you know, where Debiant is going to be, you know, so

dominant or, you know, showing up so much.

But we do commit above.

Then the next test, again, acts kind of like the test that we've had before. So,

again. bullish character of the test breakout out of that test again not that

impressive suggesting that you know that demand is somewhat deteriorating and we

are seeing a little bit of the supply at this point on this particular bar so

let me just clean this up this bar right here was suggested that supply was

coming in right away we want to see the test the test was okay

But the breakout did not impress us. The next breakout does not impress us

either. And then we have this bar right here, which is basically telling us that

there is some kind of conclusion, small climactic conclusion

to the action where demand is exhausted.

Whenever that happens, and there was a question here, so let me quickly just...

so the question was how do we conclude um or how we test right i think the

question was about the test let me rephrase this how do we conclude that

the end of the swing because if this is the end of the of the swing then

this is the most optimal place to exit we want to kind of find

that so we could have conditions where

deterioration of the demand and then supply comes in and produces the bar

this the change of behavior bar we could have

deterioration of the demand and then sudden

surge of the capitulation by by the weak hands as they are entering

this position

then the next bar acts as a change of behavior because as you would look at

as you would look at the whole move

since the low we probably had only two other bars that are somewhat similar

to the bar in question and then look at how the volume signature has increased

and we've already said that supply started to come in started to come in

started to come in somewhere here on the climactic bar itself and then again so

supply is subtle but it's coming in and this red bar now acts as a change of

behavior so and therefore we expect from here some kind of reversal

change of behavior kind of like a much of

larger magnitude

possible trading range so there is no reason for us first of all not to take

profit and secondly not to consider exits in the position altogether so

therefore i thought that these two bars were kind of like perfect for the exit

if you miss that then just exiting on this bar and this bar

would be probably the next exit that i would highly

suggest and you should be done for the day at that point of time so that was

main trade for today and hopefully that satisfies the question about you know

going through okay something else

really quickly that I want to mention and then let go

like this um and obviously there is a lot of talk about tesla you know how it

influences the move especially of the s p uh but tesla was not um you know

i i think not the only reason you know why we had this move because tesla is

not in the doubt you know tesla um you know it's not in other indexes uh you

know it's entered uh s p and yeah

in tesla to the downside and it kind of influences a lot

the index first and with that by the way i'm kind of expecting maybe that with

more of trading in tesla we're gonna see how volatility there might actually

start to diminish doesn't mean that tesla is not gonna move up or down

Diminishing volatility could be observed not only in consolidations, but in the

direction of moves as well.

So I would be noticing what is behaving well and better than,

you know, other indices.

So obviously, Russell has just been amazing, and it had an amazing run after

self -thrust probe. It was the strongest, comparatively, index, you

be watching, you know, what's going to happen here tomorrow and into the end of

the week.

Could we recover and continue?

So the days are going to be acting as a test.

So just a thought there.

Okay.

This is what we've done with some of our students in the Wyckoff Trading Course

Part 2, which is the practicum. So, Trading Course Part

1 is all about the knowledge. Trading Course Part 2 is all about practicing

skill of recognition of the concepts that we've learned in WTC 1.

Those are advanced students, you know, they all went through WTC.

requisite for the practicum. So they're somewhat at a different level and

it allows us to go through a lot of exercises during the session.

One of the works that we decided to do in the spring semester of

2020 is just to read the book together.

And we've chosen David's book. I went to David at that time and I said to him,

well, listen, this is what we want to do do you mind if you know do we have your

okay and blessing to do that and he was really excited he said absolutely just

let me know how it goes and so on so forth so we pick specific

chapters of interest to students so we pick the chapter on the screen on the

upthrust absorption chart started and then two chapters on tape reading

So, what we're going to do today is we're going to quickly go through those

presentations by all of these students.

I did ask students today whether, you know, I could use their slides, you

in this class, and a majority of them said yes.

Some of them did not come back to me, you know, in the email, so I hope that

this is okay.

But I wanted to have this slide because for those of you who have not

done this work, who have not read his book, this could be another way

of working with that book

or maybe to conduct some initial work.

So you could just go through the slides.

We're not going to do a lot of work around it today.

I also want to say that for those of you who do not have this book, who have not

read this book, please do.

This is not just a tribute to David.

wgc course number one we are uh the required material is hane's book the

three uh top skills of uh for top trading three skills for top trading

whereas uh you know in course number two it's more advanced material so

david's book is more appropriate all right so the first one uh uh is chapter

is on sprints from serger

Thank you, Sergio.

And let's definitely go through some definitions. Spring is a washout,

penetration of the trading range or support level that fails to follow

And this is a very important statement here.

It's a temporary commitment to the downside that does not resolve in a

down move.

If you remember it like that, I think that would be sufficient.

And obviously, it reverses and becomes an up move.

So failure to attract new selling and failure to follow through,

those are kind of the most important ideas. And also, a comeback of the price

into the trading range.

Again, this is how quickly I want to go through the slides. And then when you

have those, you could be a little bit more...

deliberate when you read

Obviously, our risk increases relative to the risk when we buy the spring

itself. So let's say we could buy the spring itself, we could buy the tap.

And there are multiple spots here where we could buy.

And there were quite a few questions on the points of entry.

So this is a really great example for us to go through. So I'm just going to

walk you through some of the points of entry that I would be thinking about

in general.

So there are different types of springs.

So spring number three is going to be a spring with the low volume signature

and very low penetration of the support.

And usually the way how I show this to my students is that

where there is a tail, an intraday tail that goes below

the support.

that all happens on low volume signature that is dimension so that suggests that

supply is exhausted and there is no follow -through

there's going to be no follow -through to the downside

that would be our

point of entry number one the second point of entry that

we don't see

Even though there are some last points of support here that come, you know, on

the reaction in phase D, and we could say even that the test here could be

labeled as last point of support. I usually label this as a test, but you

label it as last point of support.

What I mean by the last point of support is the higher low.

type of entry you know you'll answer just based on the reversal there's

nothing uh too much to that okay so let's talk about

phase c and screen and the task points of entry and with

this we're going to say that this is a screen number two so we said screen

number three we said last point of support

This is entry number one, entry number two, entry number three, a test

of screen number two.

So there are quite a few points of entry here that we could find.

First of all, even though it's not advisable to buy screen number two, for

of you who are more advanced could think through the logic of why it is

possible.

And you could actually differentiate between buying and selling on the way

You could do that. And I'm kind of challenging you a little bit here, even

though it's not by the book.

But you could do that.

Usually we would say that we would be buying a test.

How would we be buying a test?

Well, we want to see a high or low, and we want to see some kind of recovery.

So these reversal bars...

points of entry the local breakouts of those

lows of the test are also possible points of entry for us

so I'm gonna put here reversal bars

of entry i mean there are a couple we also could enter on what i call a sign

strength bar now a lot of my students when they come you know and i ask them

what is a sign of strength you know the most common answer to that is usually

well um it's the increase of the volume signature and

increase of the bar of the spread so

of strength bar but they don't give me the definition of a sign of strength

rally and sign of strength bar and a sign of strength rally are two different

things a sign of strength bar is a part of a sign of strength rally

and indeed characteristically the sign of strength bar is gonna

see the increase in spread and it's gonna see increase in the volume

and from this chart we see both

the increase in spread and we see the increase in the volume signature that is

behind that increase of the spread a sign of trend bar is the point of entry

you could enter the sign of strength bar at the close you could enter it on the

test of that bar you could enter it intraday on the breakout so quite a few

entries there as well so that's our fourth point of entry

we want to buy a sign of strength bar before

we hit the resistance we do not want to buy a sign of strength bar above

the level of the resistance why because we know that the backing up action is

going to come and it's going to not only come into the body of our point of

entry bar but potentially could go even lower and get us out whereas the sign of

strength bar in the middle of the trading range

less of an opportunity to be violated and that's the whole thing you know

the final strength bar okay well our next point of entry is going to be

around the backing up action and the backup action could happen only in

multiple ways here we see a very kind of like a relatively shallow backing up

action and we see that the duration of it is very short so therefore

you know you usually have this type of structures where you have a test

of the supply that came initially and we see exactly that or we see a

more pronounced supply that kind of becomes the trading range

and then there is a third variation i'm not going to talk about this here that

is a backing up action out of the apex formation, which has a very

minimal result to the downside and has also the shortest duration

out of all of the backing up actions.

So here is our next point of the entry. So we want to enter on the reversal

somewhere here, or within the structure of the trading range.

local breakout of the backing up action so here and here

so you kind of could see that the reason why i have so

many scaled in positions usually is because i'm recognizing that there is

a confirmation after a confirmation that comes on the way up through phase d

and then going into phase e and you could use those confirmations as your

initial points of entry.

Once you've accumulated a significant position, then you just stay with the

trend. But if the price reverses around the resistance in the upthrust type of

manner, then you are not fully invested in the position and

you're...

So hopefully that covers multiple questions on the points of the entries

confirmations. Let me just talk about confirmations a little bit more.

So what would we consider a confirmation?

Well, we want to understand the action itself first. So here is an action. What

is an action? It's a potential spring where the price commits to the downside,

and we want to see whether this is a temporary commitment or not.

What would be a confirmation that this is a sprint?

Well, we know that the price needs to come back above the support level.

Here's your confirmation number one.

Your confirmation number two is going to be in the testing action because if we

have some increase of the supply, we need to find a place where supply goes

or supply, let's say, stays the same, maybe even increases, but the result is

low.

of this screen plus test formation would tell us that

supply has been observed to the point where the price could move up or

to us that demand is present and it's capable of you know to push the price in

such way that the breakout will happen so here's our confirmation number three

then we want the confirmation as a sign of strength bar happens um that

basically tells us that now the price could move through the trading range

the spring and sustain those gains number four number five

confirmation of the breakout multiple attempts to break out before

concluded and failure could we break out in such way

that would tell us that um indeed

ability of the price to continue to move to the upside after the breakout this

is very important for the definition of the sign of strength because it shows

that there is buying beyond the levels of the resistance where supply has come

before and put the price down confirmation number seven is the backing

itself we are back into the support and when

or we are breaking it and the price does not go down to the trading range a

lot.

So that's our confirmation number seven. And confirmation number eight, final

confirmation, is the breakout of the backing up action, which suggests the

resumption and continuation of the uptrend.

So I want you to think in those terms.

like a story develops as kind of price shows in volume price and volume shows

uh their action interaction between each other and you constantly want to go

through the structure and you want to say okay well now what's going to happen

after the sprint tell do we see it is it a confirmatory test

yeah so what's the next uh part we need to locally break out out of that

Did we do that? Yes. That acts as a confirmation.

Now the price needs to travel up and travel with a specific character.

Expansion of the spread, expansion of the volume, expansion of the demand,

presence of institutions on the way up.

Do we have that? Yes.

Next one, the break above the whole formation where previously we had that

supply emergence and so on and so forth.

like this you see uh through those confirmations

that the uptrend is intact and you have more confidence you know to act on the

positions uh and obviously just using those entry points that i've specified

before okay uh what's the next point here um

this i'm probably gonna skip so you guys

go to the slides and then go to the book uh what kind of uh

you know lows could we have as free i mean there are two

structures that we're seeing here this is a slightly higher low so to me this

acts as a potential screen that fails and doesn't have a lot of volume

So we see an exhaustion of the supply throughout this whole picture. In this

picture, we're seeing lower lows.

So COVID reaction should remind you of this type of structure.

Then, you know, at the end, obviously, 2008, 2009 low also had the same type of

lower low structures. And we have quite a few of those just generally.

So what does it tell us? It tells us that still there is some selling. And

usually that comes, you know,

that's still bearish and at the end of such a big big move to the downside

usually the sellers raise the cash um and you know anything becomes social

funding if you go to the corporate 19 low you're going to see that everything

was sold right so bitcoin was sold gold was sold bonds were sold

market was stocks were sold commodities were sold why

everything was sold at the same time because they needed cash.

Cash was the king at that moment of time. There is a moment like that in

well. If you're going to go to the history, you know, into that

2008, you're going to see selling of gold, selling of the stock, selling of

commodities, and so on and so forth.

Institutions just need money. They need cash. They want, at that point,

preferable, you know,

keep this so again just go through this yourself

because we have quite a few slides here some of the important quotes you know

from david this is probably the one that you guys remember for sure you can make

a living by trading sprints of thrust i mean david most definitely coined this

phrase and you could be thinking about this we were just doing the access in

the practicum course where within the construct of let's say

an uptrend which starts with the spring and usually we would be thinking yeah if

I would just you know by the spring and then stay with with the whole

Obviously, just smaller springs.

But also you could have, let's say, a spring over a specific bar. Let's say

bar commits to the upside, and then we have some kind of reaction.

And that reaction undercuts that bar.

And it's going to act locally as a spring.

And to me, that's what this statement is about. It's not about those big

structural springs.

obviously that's you know how it was meant i think that you know

david had a lot of understanding what kind of springs potentially

we could see this spring basically is just a temporary

commitment below the levels of buying and then a subsequent recovery so if we

have a bar that commits to the upside then we have let's say multiple bars

and one of them goes down and then quickly recovers it's acting as a spring

itself you know that spring could come almost immediately or

just later on but within the context of an

upgrade you could find

David called those sprints on the move really good.

Okay.

There is definitely a higher percentage of success for those sprints being in

the uptrend, right? Because uptrend is going to be sustainable for quite some

time. And sprints are going to happen there because somebody is taking

demand deteriorates, and the price reacts down under its own weight, and

supply comes in.

So you're going to have some movements to the downside, but they're never going

to produce a meaningful change of behavior until the final climactic

So therefore, you know, whenever we have a spring as a short -term oversalt

condition where we see some kind of weakness, our expectation is that it's

to recover. Based on that expectation and on our observations, we could enter

that spot, and obviously that would be a very low -risk high. probability trade

okay so what else as i mentioned

you know this spring idea is that we don't have a follow

-through to the downside so to me this is always the question a sign of

or a spring a sign of weakness or a shakeout so therefore

when you see those situations, whether this is a sign of strength or upthrust,

or a sign of weakness in a spring, always think about the follow -through

direction of, let's say, an upthrust or a spring.

Do we have a follow -through to the downside? If we do, maybe this is not a

spring. Maybe this is a sign of weakness.

Okay, and then this is also important.

In the downtrend, I would just say this.

don't even try to find a spring i mean find the spring after you establish that

there is a sequence of capitulation selling climax some kind of trading

range and then you have a spring those type of springs are you know have higher

probability of the reversal rather than the springs within the context of the

downtrend where you might have

say a bar to the downsides like this and then

some kind of trading range and then within the trading range a smaller

that you have as spring but then it goes into an up thrust of this bar

accumulation where you could see the science

of

accumulation and it could be just a local

So spring number two is always going to be entered on the test, right? Why?

Because spring number two is going to have an increase of the supply, whereas

spring number three has a decrease of the supply.

So that increase of the supply, as you guys know from WTC1, always needs

testing. Testing always needs to come structurally at the high or low and also

at the diminished supply signature.

But we could have these two types.

right so for instance supply has increased here so we want to see the

either right away tab right here which is on the lower volume signature or

somewhere here which is absolutely diminishes that signature when we do not

you know a very high supply and i would say that this is still a relatively you

know average high supply i would be thinking like something like this

the supply characteristics we might have a much more aggressive action to the

upside right away so just some character and here are some of those

springs you know that we've talked about um you know on the way up you might be

thinking okay um this is acting as a sprint after a sign of strength

in the backing up formation it is a spring relative to this box

the trading range but there's a significant bar it's a breakout bar you

have let's say a spring like in this area right here here's a local spring to

this smaller trading range or to those bars obviously much larger springs like

this here's another spring here's another very very small spring right

you could go through the whole chart and you could find so many of those

right here um obviously this is just a very large structural structural spring

um so you could see one two um not necessarily here but relative let's say

this low this is a spring two three four five six seven eight eight springs

on the way up that i just quickly identified and there are some more so

context

here that, you know, I would remember from this slide.

Okay, how do you buy those springs?

Limit order?

Yeah, you could definitely do that.

You don't have to buy the spring itself.

You know, you could buy confirmatory signals which come after the spring.

And you don't have to buy the close of, let's say, a big confirmatory ball like

this. You could just...

here at the local level, and then get in on this bar after the spring

materializes. But you could definitely also do the limit orders as well.

I am personally working a lot right now in my trading on

the entries on the reactions that do have specific characteristics within the

context, let's say, of the uptrend.

i definitely would compare at those spots but also you could just buy the

right so if you see the spring buy it you know put the stop loss below uh and

you are correct on the context if you're correct on the definition of the spring

then you should be okay um and obviously sometimes it's gonna fail okay

um do you give much value to the intraday spring as to the to a daily

from david so um i think it depends just on the trade that you know you're

entering let's say if i'm entering a campaign trade which

i'm gonna hold on to for over a year then i'm definitely

gonna be looking more at the daily and weekly charts rather than intraday

intraday entry there if i'm very sure that this is the low but to me i would

prefer on the daily just to seek that confirmation uh because if this is a

campaign trade then the causality is huge and the effect is going to be so

pronounced that you know intraday movement would not make a big difference

know at the end of the trade but if i'm let's say doing a swing trade then for

sure i would go into the

price action and i would take the entry there and obviously if i'm intraday

trading that you know i would be looking for sprints on that level do you

recommend using the buy stops i use buy stops a lot again because

they usually put at the points of confirmations

then you know that allows me

ratio in my favor and kind of gives you a little bit

more confidence but again I think that you should have the strategies for

the entries that are both you know stop by Lehman buys market orders and you

should understand which order you would use whatever scenario okay let's go

to the next chapter

i want it so let's go through this really fast so what is

an upfront that's when the price moves above the line of the resistance and

fails to follow through such as a failed breakout could be another name for the

up thrust so something like this we're committing to the upside and then we are

going down so my definition of an up thrust is

temporary commitment above an almost immediate failure back into the trading

range or below the resistance upthrust at

spring could be of different character they could look differently right so we

could have an upthrust like this this is what we were discussing in the market

outlook at the beginning of the session right so usually i would call this an

upthrust pro so the price

the up thrust where we have a commitment up and then it fails we could have an

up thrust where we might have actually you know quite um you know a few bars

so in the key here is to understand how many progressive closes to the upside we

have i usually do not like to see an upthrust

closes up that are progressing to the upside.

That usually tells me that this is a sign of strength.

But whenever we have somewhat of a quick move up, quick commitment, and then

almost immediate failure, that would be a threat.

I like this analogy with the rocket just going this way.

So there is a lot of that type of action where the rocket is

deteriorates momentum deteriorates and then the price falls and then the speed

increases velocity increases on the way down so it makes a lot of sense to me um

okay upfront could have some retests right so

let's just say that

have a complex structure as well so those are more advanced complex you know

discussions that we would have so today i'm not going to go in there

okay

let's okay

so this is an interesting

point full upthrust um so

of talking about the same thing which is using different semantics right so a

failed up thrust is an element of absorption and we saw that from the

outlook right that bar where supply has come in we're calling it an up thrust

pro then test test and continuation to the upside so this is

an ability to drop not just back into the trading range but you know drop

down to the level of the support.

And after testing, the price actually goes up. So the up thrust failed. And

is a failed up thrust?

you could have up thrusts that are going to have increase in the volume

signature for sure you could have up thrusts that are gonna come as a

deterioration of the demand we could feel how the volume signature diminishes

here and demand diminishes and yet you know we're trying to commit uh to the

upside usually the next bar to the downside this is where the emergence of

volume is going to be

the emergence of the supply we could have up thrust that are going to have

already high volume signatures and usually those are going to be up thrust

we see that the ceo is selling into the strength of weak hands and that selling

actually started to occur here first

So in this type of situation, we want to measure that strength of selling by

shortening of the thrust. That's going to be very important.

Or we want to measure the selling of the demand, in the second case here,

also by the deterioration of the demand.

The different ways of how...

unfold i think that you know to me here what's really important is this bar

right here it kind of shows what's going on where

the volume signature increases i think is

this the bar yes i think so yeah

so the volume signature increases uh why because we're breaking out and

we've seen that supplies coming in so short sell is seen as almost like a mean

reversion it's above the resistance so every time the price comes to this level

goes down comes to this level goes down so they're going to short into this

abnormality by the price we could see the tail here right away and then after

that selling

look at what volume is doing. We really don't have a lot of follow through to

the upside after that.

And the change of behavior bar did not require a lot of volume signature, which

also tells us that demand is exhausted.

And demand was exhausted just pushing the price out when supply came and

consumed all of that demand. After that, demand is weak.

it doesn't require a lot of supply to produce an ease of movement so

kind of like an ease of movement after the up thrust and then supply occurs

context of the downtrend.

And we could also mention that you are going to have quite a few upthrust in

uptrend. It's just that they are not going to be as significant.

They're going to in a way fail as spring failed in the

downtrend. So you are going to have instances where upthrust action takes

place in smaller consolidations.

And then they are not going to produce significant moves down. They're just

going to produce temporary supply conditions that are going to push the

down potentially into a spring situation. Look at this spring. Look at

spring. Look at this spring.

This spring.

This spring.

And then the price is going to recover in the uptrend.

In the downtrend...

And this is just should be, you know, that idea that you could make a living

trading strength and upthrust. This should be a convincing strategy for you

create your trading around those temporary commitments above

or below support and resistance levels in the context of the of the trend.

Obviously, you know, this was the 2000.

7 big reversal as an upthrust.

But then on the way down, and this is the weekly chart, look into this area

right here.

Here is your local spring behind this bar.

This is a breakout bar. This is one of the most important bars in this

distributional structure.

And then we have a small upthrust that works out beautifully.

Extension of the move after that in the downtrend environment is definitely akin

to these local sprints that come in the uptrend. So hopefully that is

sufficient view for you to

actually follow that idea of trading the sprints in the

uptrend and trading the uptrend in the downtrend.

and this was on absorption so absorption let's see how david describes

absorption process through which long liquidation profit taken or new short

selling overcome and absorption could happen

at different levels and

absorption is not only happening and this is kind of like a big mistake that

see

absorption is not just an element of the accumulation or reaccumulation trading

range absorption could happen in the uptrend as well so for instance we could

have as i mentioned absorption at the lower level in the accumulation range

absorption at the higher level in the accumulation range then let's say

absorption on the way up as we are breaking out absorption

let's say on the way up absorption in the reaccumulation let's say in phase a

and then in phase c and then continuation so there are quite a few

absorption can take place it's not just a function

of the accumulation of reaccumulation range whenever supply occurs in the

uptrend it would have to be observed let me just give you even this thought

there is a temporary absorption in the downtrends so for instance

if we go down and then we have some kind of intermediate selling climax it's a

temporary absorption that we are seeing

where for some hand this is the point of

value and they are coming in and they are buying

price from more and further down and uh goes into the change of behavior change

of character and then we go into the trading range and then continue to the

downside but at this point right here there was that temporary absorption so

there are quite a few um you know ways of how we could see

absorption on the chart okay so this i'm gonna well actually

this is important

These are clues pointing to the successful absorption.

So rising support, very important.

We should see that as the supply comes in. We could see the initial reaction of

the price, but then we should see rising prices and that raise support

as well.

Volume increases at the top of the absorption area, at the top of the

absorption. area so let's say supply comes in and we

have some kind of absorption we want to understand that the there is

and I wouldn't say that you know specifically at the top I would just say

the volume increase in general is going to indicate that supply was present

and that demand

and absorb that supply and then demand come in a little bit more and push the

price up so just in general the volume signature is going to increase but i

wouldn't say that specifically it's going to be at the top of the absorption

at the bottom because you know absorption obviously could happen also

bottom lack of downward follow -through after threatening a price bar

and this is very common so for instance we could be thinking about support and

just a big bar to the downside where there is a lot of volume where there is

lot of supply but would we why did we stop here at the support well

the opposite force was present and it stepped in

demand stepped in and absorbed the supply to the point where the stopping

has occurred and then from here obviously we don't want to see a follow

-through. Or if there is a follow -through, in some cases, we want to see

negligent, you know, bearish texture where maybe the spread diminishes and

suggests that we're going to have some kind of rally.

Okay, at the right -hand side of the absorption area, price tends to press

against the resistance line without giving ground.

So this is a feather type of situation.

let's say supply increases on the way down but then absorption happens on the

way uh down where demand increases and then incrementally supply still comes in

still comes in still comes in but it's less than what we've seen before and

absorption happens of that supply and demand just pushes the price up

feather a feather action and then as it comes to the resistance

it comes to the point where first supply has been absorbed significantly already

and then we are at the structural point where we need to have a breakout so this

breakout usually happens with a lot of momentum

phase is resolved by a spring and to me the spring action

is just basically an idea that whatever latest supply

at the support level so let's just talk about the absorption at the support

level

itself so this is going to be uh initial opening of the position by the

big interest so therefore there's a lot of demand at that point that stops the

price from moving further down and then they could also buy on the way up but

not necessarily through the whole rally maybe into the middle of the trading

range and then they're going to stop that buying is going to produce some

of follow -through momentum

into the high of the automatic rally and then the price is going to fall as it

falls we could see some absorption at the lower levels of the support and then

again imagine that for the price to move up we need to observe let's say

100 units of supply that's what we need to do

that's what needs to be done at the level of the support and let's say into

phase b we are maybe like at 75 units that are in strong hands right

now so the remaining 25 units of the supply does not allow the price to leave

the trading just because it's it's there it's available and as the price starts

to go down into phase c we might see that emergence of that remaining

my students that that last supply that emerges

once it's observed it shows the timing of when the price is going to leave the

trading range and that last supply could be at the level of the support

and also at the level of the resistance once both are done once the

latest supply at the level of the support and supply at the level of the

resistance are observed then we go into the uptrend and that process kind of

repeats over and over again um okay uh clues

of the absorption of the bind you guys maybe could do this by yourself but

really quickly again you know just what do we see inability of the price to

rally away from the danger points right um heavy volume um

failed springs

okay great david is asking how do you know only 25 units are left based

on the volume uh signature no david that was more hypothetical you know kind of

example of um i don't know exactly how much volume is left but if let's say

signature shows something like this I know that

relative to phase a supply has diminished right

but it produced that local splash where supply has increased so this is the

last supply at the support level that needs to be consumed

absorbed before

price starts to move up you know significantly and you could find this on

time frame as well and even as a part of an uptrend same for

the you know distributional characteristics as well okay you guys go

this yourself so it's 5 10 i want to make sure that we get to some exercises

this is probably one of the uh you know best works concepts that david presented

to us.

I have something similar, and we all do, all of the teachers of the Wyckoff

methodology where we discuss the structures.

I think the key here to understand is if this is the sprint, what would be a

confirmation, a test, and then a continuation through the trading range?

would be a failure, a follow -through to the downside?

resistance level what would act as the confirmation after the breakout um an

ability of the price to stay above the resistance and where resistance acts as

support and then recovery recovery and resumption of the uptrend this is you

know this is going to be important so and i would definitely just study this a

little bit to understand

of shows that you know we've talked a lot about absorption at the support

right so whereas that absorption happens already in this area we're seeing some

absorption this bar right here x is an absorption we see some buying on these

two bars then we're seeing some buying here then we're seeing buying on this

right here

port level and then as we go into phase c we have this lost supply

that is being observed and then from here because of this

action the price actually starts going up in a different way but this volume

spike suggests emergence of the supply so what do we do here well we have to

have some kind of test and the test initial test

is not that great only a high low and then the

emergence of the demand here would be suggestive that the bias is still up

but because of how deeply we ran down that's just the trading range and what i

like about this picture is it shows us how absorption at the high level happens

absorption at the resistance level so resistance level is defined by the

climactic action some supply is coming in on this bar and we need to overcome

this level right here by attacking this level multiple times

and trying to see whether if the demand is going to increase sufficiently to

push the price higher or supply is going to deteriorate at this level So we're

seeing that on this bar right here, still some emergence of the supply that

we're seeing.

And then that takes the price down.

And then on the next attempt, what we're seeing, again, supply is coming in. And

now supply is, you know, quite aggressive here. And hopefully I'm

this correctly.

Okay. So here is, I think this is the bar, okay, that is overcoming.

committing to the upside.

Look how supply is increasing.

And then on the next bar, we're seeing some demand coming in.

So as demand comes in and the result is more negligible, negligent,

we are, and the close

is at the level of the resistance, we are thinking that it's different than

picture.

we didn't have as much demand on that uh follow -through bar and that suggested

to be it is not only present but what is it doing it's absorbing the supply and

then the next bar does not have a big volume signature and obviously we're

the close here of the session and that suggests that same power such as you

a continuation to the upside so we want to see that supply emerges and then

through the absorption supply is kind of going to go down and it could take

several spots for the supply to be observed and therefore you're going to

those probes

let's say capitulating into this bar and then capitulating it into this bar

these are the levels that would be of utmost importance to us we're coming to

this level failing we're coming as an upthrust failing again this produces a

small spring and then what do we do into these two bars we can't rally and then

this failure should negate all of the suggestions about the upward bias

the important bars like the breakdown bars and it could look like a spring at

that time it could look like the demand is coming in and it does but the key is

what is the result so the result is an attempt to

go up and failure within the structure of this bar right here to the downside

no follow through to the upside all

right so you guys could go through this yourself okay

this one is from mcball and let's go to this chart right away so this is the

chart there was a question about this this is the pnf chart that

shows cumulative swings up and down

As you know, PNF allows us to see a much clearer

picture where a lot of the price action is being condensed into one column

of X's or O's. In this case, we have numbers.

And what do those numbers mean? This is just a representation of the volume

signature.

This is exactly how Wyckoff himself was looking at the charts. So

he was trying to figure out the relationship

between effort and the result.

So let's just follow the downtrend right here.

What do we see?

We're seeing that selling kind of deteriorates.

shows somewhat of the climactic action. We don't see that before, right? So 2,

6, 1, 6, 12.

That was kind of like a big one.

But this shows some kind of climactic run capitulation.

Then on the next move down, we're seeing how there is some kind of

deterioration.

reversal a change of behavior as the reaction and as we go through the test

here is the big number but yet we're creating a high low so that's effort

result where effort increases and yet we cannot push the price down the price

does not follow to the downside other attempt to go down

somewhat

signature here with 17 and that produces the next rally

so we are changing behavior here and we're seeing that from

emergence of the volume signature and specifically demand that pushes the

higher and that is confirming you know deterioration of the selling and

suggesting the rally

hold as the higher low and then another local breakout the volume signature is

not that high but that is suggested that the selling was exhausted as well and

that the price could move up easily on the ease of movement again

those big numbers are important they're just showing capacity of the price

to move up

of the demand demand present this one as well 16 and look at this whole rally up

um and even though 10 seems to be like a big number there's 12 as well

so we're seeing a lot of volume increase on the way up a lot of

demand and again price is going up with the higher highs higher lows type of

structure

At the bottom of the reaction here, 10, effort is increasing to push the price

down, but yet the downward result is diminishing.

Bullish or bearish? Definitely bullish.

As we continue on up, we probably would not see anything

as a danger until maybe this.

to go up and look at the quality of the demand that deteriorates suggesting the

reaction. Reaction happens, it's one of the biggest

reactions to the downside, but yet we come to a very logical place

where we stopped before, where the price had support before, and

still within the context of the uptrend.

We're thinking that this is a potential reaccumulation. Would we have a

confirmation of that?

Okay, well, since there are lows here, the price goes up.

because to him that was probably the the

basics for his work that he has done with the cumulative wave

and with the rancor charts um and we actually uh kind of

uh you know were experimenting a little bit with rancor charts um i'll probably

will start showing this later on in 2021

unusual and you could capture the volume signature and

you could capture also the duration of the rank or bar and that could tell you

how much time was spent at the specific price level and what was the

effort at that place so we'll talk about this you know

of David's work in this chart.

And he was holding several charts like this, original charts by Wyckoff.

So to me, this is a very important chart, not just in terms of how David

evolved with his studies, but also just in general, just to kind of think how

you would go through this chart.

I want you to maybe make it as an exercise.

Print it out.

then go through this chart column by column and try to think about what is

on what is happening for each of the unique of the box in each of the columns

and I think it will make a lot of sense to you as to how David was approaching

his work okay so I'm gonna go away from this but before

and this is within the context of the overbought condition after the climactic

surge these are the places where an overthrow would indicate probably

a potential stop in action as supply stops to come in a perfect

force in the uptrend, it's always going to be there because somebody is going to

be taking profit, somebody is going to be shorting the market in anticipation

a larger reaction.

So your job as a tape reader is to see the emergence of the supply and see what

happens next.

There might be a continuation to that. There might be a change of behavior

that's going to come, a more meaningful change of behavior.

You need to assess that.

in decisions but if you don't see that follow -through of the initial supply

then you have to continue with your uptrend and

this is definitely a skill that you have to develop but also you have to develop

this as a belief because a lot of beginners do not understand this they

emergence of the supply they see how the volume increases

This is the beginning of the end.

In our minds, in the Wyckoffian minds, this is just a potential beginning of an

end or a potential continuation of what is unfolding.

So I want to, you know, accentuate this to you a little bit more.

Think about this.

It's an extremely important...

So this was one of the questions, you know, talk about the cumulative weight.

here is the volume, regular volume signature, right? So

it's kind of visibly for the untrained eye, hard to

recognize how much volume is on each of the swings, right? So here are the

swings up and down.

looking at the pnf how the pnf combines the volume from multiple vertical bars

the next logical step was to think about the volume for that column

and that's why both david and i you know love uh pnf charts

because it's a cumulative representation of effort and the result at the same

time

and the idea behind the cumulative wave volume has been taken from the pnf and

the pnf and volume so here we're seeing how david is combining all of the

volume and in from one swing into a rising

volume bars and you could judge the

effort

observe the result for instance we could say that the moves to the upside let's

say one two three four the moves to the upside you know were

somewhat good until wave number four we've seen how

demand is in control of the move the second wave is

not producing the biggest result but it doesn't produce the big reaction

and supply here is very low on the reaction and then we have a climactic

you could use this as a climactic surge

was able to come in and pick up all of the you know

demand that we had into the climactic action right here and we've seen how

supply has emerged on the way down and that's the whole premise of this

twin analysis I think I'm gonna introduce

some of the swing analysis that he's doing using the David cumulative weight

into the curriculum so we'll definitely do this in the future and I think it

will help us to remember David that way you know a

lot of things that I was telling him that we were doing in classrooms he was

just so excited and he was very curious because I come from academia

material um so he always was fascinated and inquisitive about

that and it's just unfortunate that we can't do this together

now but you know this could be our way of remembering him all right

and obviously i would suggest for you guys just to pick up the book to go

through those chapters where the cumulative wave volume is being

One of the other things that David introduced is the numbering of that

cumulative volume on the twins.

So you kind of could see these numbers.

And it's a really easy concept.

You could think about those numbers as the numbers for the effort.

So what do we see? We want to see the effort to increase in the direction of

trend.

whenever the effort decreases or the result decreases we expect some kind of

potential reversal so let's just go through the numbers here expansion well

don't have the previous numbers but still 32 even over the last downward

25 looks bullish we've seen this in the visual here and then look at how supply

is starting to diminish

500 to the downside the next wave down we are at 600 the next wave down we are

at 700 so a slight increase but not a big increase and then we are at 4100

so we're seeing the progression of the supply increase from

one down move to another down move and at the same time we're seeing how uh

let's say from 54 to 11

is starting to decrease and we want to find that spot where the change of

behavior happens so here's that change of behavior demand deteriorate supply

emerges what could we expect a download and that that you know

um that that's all about you know like in a very simplistic

terms that's all about

of thinking about the cumulative way of how he was thinking about when he was

constructing it it's that effort versus result a

deeper look into the supply and demand relative to the swing structure and just

deterioration of one over another

numbers such as you know this is a cumulative number of this weight right

so it's just being cumulatively

put together and that is the number usually in the thousands just depending

the instrument if this is future this one thing if this is

so this is euro 250 tick bar chart

number okay what else you

okay

so I think that these are the basics here

on the wave counts and cumulative volume counts and how to visualize

that how to work with that i would highly recommend um uh reading

david's book i think that probably that would be the best source there or

finding some of his presentations earlier presentations uh where he talks

uh his wave um actually best of wake up that is free on our youtube channel like

of uh trading method uh i think his presentation contains

that or maybe at the previous test or like i'll have to look

okay um same wave structure here

uh and same numbers so uh the only difference here

is that now we are adding the length of the wave in the number of minutes and

again this is just a little bit

concept so i'm gonna go through this really quickly you want to see

you want to see how much

time it takes for the effort to overcome a specific distance that the swing

travels so how about that

say overcome a specific area uh it would tell you that there is more presence

let's say of supply or the uh or the demand and it needs to be observed so

resolution of that extension of the duration usually is much more profound

and then a shorter duration so for instance like

right here we have three minutes seven minutes i'm sorry the

first number i think yeah the first number is the uh it's the number of

right okay so 10 10 5 10 and then look at this

55 minutes right so it took uh quite some time but look at the result

uh for this type of numbers uh you know in terms of how much time it took it

definitely uh logical to have

lot of progression in the uptrend how

do we determine the end of the start of the swing so David was

taking the closes first of all so you kind of see that the all the swings they

they end at the closes they do not he didn't look at the tails

you could have so many ways of how you define the swing you could

take the definition of the zigzag function and just go from

there that zigzag function could be based on the percentage could be based

number of points and it basically is going to define where

exactly there is a reversal so let's say if i say x percent or

a specific number of points

it's going to find that spot where that percent is being violated or the number

of points happening this is the potential reversal in wtp we're

significant bars reversal so this is similar concept but without any

quantification more of the visual okay yeah

so let's let's probably go from there here yeah so quite a lot

This was really cool. Rob reached out to David and Rob, I'm so grateful that you

did because you connected to him this way.

So I'm really happy that you had that opportunity.

So this was the current example of the SMP and how we were going through the

COVID reaction and then the subsequent move up.

So what do we... on the way down here uh 64 24 so we've seen

on the intraday basis the deterioration of the supply in this trading range even

though it still was volatile 103 uh commitment to the downside but not a big

commitment yet effort is so big so that suggests presence of the demand

and then obviously we are on you know traveling up 81 was the best rally that

we had, right? So 37, 26, 34, 34, 17,

and then 81.

So that was a very big momentum move that suggested that we are done with the

down move, we are in a different environment.

And then look at the numbers at the bottom, 23, 43, 18, relative to 103, or

64, or 19.

277 so definitely shows ability for the price to hold on to the gains and just

retrace maybe 50 percent so this was right here uh the last confirmation for

buy is up and obviously you know in the classroom we've picked it up actually

almost to the last intraday bar then as the price goes up two or three quite

a big number right there

suggestive of the climactic action and the imminent reaction

72 was the highest number since 103 so

you have to think here exactly what i've been telling you this whole session

supply emerges what kind of result does it produce yes it could have a reaction

which was you know quite a pickup look at the 62 here off the low

uh look at 88 and 81 here so we're still traveling up

uh where demand is showing up and then supply is showing a successful test so

that's a just a continuation that's how you would be interpreting those

this a lot in the first series i i have shown you how you could use pnf um it's

a cumulative effort and cumulative result so here is a cumulative result to

upside which exceeded all of the attempts to go up on the previous

so that was a change of behavior on the way out and then the subsequent reaction

did not have supply signature so you could visualize

this picture like this so you don't necessarily have to have all of those

numbers okay all right okay how

much time do we have excellent we have about 20 minutes or so all right guys

let's do some exercises so this is going to be the

This is the technology that we've been developing in the practicum class with

our advanced students.

I want you to think about this in a specific way.

for the solution where they shouldn't be one.

So

the

screen should be on now.

I want you to go through the bias game in a slightly different way. For those

you who have not attended the practical

to give you a quick algorithm as to how to think about charts when you are

looking at the consolidations and you're trying to define the bias i want you

first to think about the environment and kind of divide the

chart into different sections right so where do you see an uptrend where do you

see a consolidation within the consolidation what kind of swings do you

second thing I want you to start thinking about swing analysis, so swing

swing, and to think about the swings as what's the intention behind

that swing, what has been accomplished by that swing, and what kind of effort

behind that swing.

two types of thinking about the bars significant bars

and more importantly what is the result

which is the latest price action so what do you see there because the latest

price action is going to define the next move so therefore within the

structure of the whole thing then it's important so then only then you start

thinking about what is the bias of the game and then after that then you label

the whole thing

in itself I don't want you even to to think

about the labeling at all so we're just gonna just check out this

they're the same haven't we seen this chart in the previous one session

yeah so I thought that I deleted it okay well David if you

have in it what the bus

David,

what is the bias here?

accumulation bullish distribution uptrend distribution uptrend okay okay

one because we actually did this yeah so this was a distribution so what was the

key here let me kind of quickly go through this with you so uptrend

then a consolidation within the consolidation what are the most

elements of that what is the most important bar on this chart by the way

This is the bar right here. This bar defines the selling zone.

And look at how Uptra comes beautifully at this place.

And what is happening with all of the attempts to go up?

They all fail.

They cannot overcome this bar.

And that bar has had some selling. And that selling produced that change of

behavior.

negated almost all of the games of the last climactic run so right here we're

thinking because of that negation because of that increase of the supply

the bias is there to be confirmed or to fail and then first attempt

failure supply comes in again second attempt failure but you know more of the

bullish character and then on this particular bar this is the second most

supply comes in again and off the supply comes in we have a very rapid decline

important swing on this chart

what

is the most important swing on this chart i

would say this

right volatility increases supply in and that comes

after what after we have some supply here then that supply has been

observed throughout the time throughout the consolidation then we have a sign of

strength

this question all of you what is the result of that action

to

understand the result of the action you need to understand what was the intent

of that action right so we intended intended to overcome the support level

did we do so

chandra is saying temporarily we committed yeah and then we recovered

quickly on the next bar and then we tested it and then we continued to the

upside so it's almost like a spring type of action that is a spring

of sorts where we recover so there is so much effort to the downside

Bullish or bearish?

Definitely bullish. Do we have a confirmation of the bullish behavior

afterwards?

Yes, we do.

Supply is coming in even more, and yet we are creating a higher low.

We are capable of not only just coming to the resistance, but actually going

even above it.

And then the next move down does not have the same supply signature as

and it comes into the higher low as well.

there is only probably two or three big bars to the downside

that's it alex is asking how do you see the week up move after the

sprint actually if you would be thinking you know what kind of move do we have

like for instance here

Obviously, this is kind of like a stable move up.

This has this bar right here that has a lot of demand and supply at the same

time. But this one is also very dynamic.

Look at these bars off the bottom.

They are all bars that are somewhat larger in the spread. This

is a much larger average spread to the upside than we have here.

so we can't say that this is a weak rally by any means alex so it has

some aggressiveness and capacity actually even to probe higher prices

so this was also a little bit market related you know we've talked

about the source of funding this was that 2011 august crash that

also had a very quick

let's go to the next one

Answers are coming in.

We're 50 -50 here.

So let's just go through some of the questions.

We're seeing an uptrend, and then we're seeing a change of behavior right here.

So let's go through this area just to define exactly where the selling has

happened. I would say that selling has happened on this bar, this bar.

So we're basically just saying that this is the zone right here that we need to

overcome.

So a flashcard idea, did we do that?

And a flashcard idea is just, you know, again, something that we've developed in

the practical.

It's one thought that could bring you instantly to the solution of the bias.

those rallies fail to overcome the sell zone and the answer to that is

yes all of the attempts to push the price higher are failing

and one of the significant bars on this chart

is this one this is the most aggressive attempt by the bulls to produce

some kind of rally

some supply behind it but look at the volume signature in this

area right here except for this volume signature which is basically you know

supply we don't see anything else of significance and yet what happens

after this box we are testing first and it looks like yeah everything's fine

everything's okay but then after that we are failing

negating all of the gains that we have in this bar so it is important for us to

understand what happens on the right edge of the consolidation we don't

necessarily want to kind of like lose that perspective of what is the short

-term potential move and then when we think that you know with this negation

the gains on that big bar this is looking bearish if we're gonna go down

difficult bias games, and I wanted to pick more difficult ones.

So look at Twitter. 75 % were saying that this is an accumulation.

Okay. Yeah, that's it.

And we are right at 6 o 'clock.

Alright, guys. So quite a lot of material today, but I appreciate that,

know, I could be done today for the year end, for the semester end, just, you

know.

start resting again it's just so

unexpected and so heartbreaking that David is

no longer with us so hopefully going

through the slides by students you know on his book you know we felt his

presence we felt his thoughts

to take us some time, you know, to come to the acceptance that he's not here.

And we can't really let go to the source, to

him. So I would advise you guys to absolutely pick up his book.

Reread it if you read it.

Reread it as a study guide, as a study book where you're making notes. where

you're printing out the charts, and then you're going bar by bar.

Meanwhile, for those of you who are going to continue with us on tape

and chart reading, I'm looking forward to January's tape reading lab, so keep

that in mind, and we'll inform you as to when it's going to happen, how it's

going to happen, what format, and so on and so forth.

One of my personal goals is to go even deeper in chart reading, tape reading,

and I'm just kind of seeing a lot of the things that we

even haven't talked about.

But those are the things that are even nuances, they're just a little bit more

advanced, and obviously I wasn't expecting that the course is going to

like this.

So with that, I would like to wish everybody...

Happy holidays, whatever you celebrate, whether you are in the U .S. or around

the world.

You know, I'm wishing all of you guys a peace of mind in this

crazy world, in this crazy year.

I think, you know, without any exaggeration to say that, a lot of us

that, you know, it's good for this year to end, and hopefully the next year will

be much better.

with your family enjoy the time with your family and at the same time figure

how to use this vacation time you know meaning vacation time to your benefit go

through the charts pick up David's book you know read that you know pick up our

videos pick up the videos from tape reading course go through those make

right guys with that thank you so much and if you have any questions just email

like associates at gmail .com I'll be really happy to hear from thank you guys