Original subtitles

How to predict sound scenarios.

Once we are clear about the market context and we know the type of strategy

we are going to try to execute and we have identified the location where we

wait for the entry trigger, it is time to predict the scenario.

This section has to do with the how and covers all the reasoning from the moment

we determine the context and identify the trading zones and levels until the

moment we enter the market, at which point we will begin to apply position

management techniques which we will look at later on.

Thanks to the roadmap that the methodology offers us, the basis for

sound scenarios is that we should only try to predict a single movement and

never anything beyond that.

This means that if we see that the market is in the middle of building the

during phase B, we shouldn't even consider any type of scenario because we

know what is actually being built.

There are many traders who, when looking at a chart like the one in the example,

would at that precise moment suggest that the most likely scenario is a

redistribution. How is this possible? The only explanation is that they have

absolutely no idea what they are doing.

It's not Wyckoff.

A trader who really understands the fundamentals of the methodology would

predict such a scenario.

At most, they would accept the possibility that the price might break

the highs of the structure, but they would just as easily accept the

that it could break through the lows. In other words, There is no point in

trying to predict a scenario of this type.

And the worst thing is not the prediction of a potential upthrust

The worst thing is that it is automatically assumed that after the

price is going to break the structure below.

It is going to carry out the test after the real breakout, and it is going to

develop a new bearish movement confirming the entire structure as a

redistribution. This is a good example of what you should never do.

The why has to do with the reasoning that we discussed at the beginning of

course on the adaptive market hypothesis in which different types of

participants coexist all with different needs, valuations, and capacities.

All this leads to an environment of high uncertainty in the market, almost to

the point of randomness. So predicting this type of scenario without any

foundation makes no sense whatsoever.

As we have already commented, and applying this logic to what concerns us

With respect to market movements and the development of structures, we should

always take into account these two aspects when predicting sound scenarios.

We don't know the intention of the traders who are supporting the current

and we don't know if the traders with greater capacity might suddenly

and cause the market sentiment to shift.

Let's imagine that the market, for whatever reason, listens to that analyst

predicted that hypothetical scenario and makes an initial movement to the top of

the structure to interact with the liquidity zone.

No one can know what will happen there.

What if an accumulation cause has been built and it effectively breaks upwards

out of the structure?

We can't possibly know.

Technical analysis in general, and the Wyckoff method in particular, is a

reactive approach.

Therefore, we cannot make decisions without having previously seen what is

happening in the market.

Before it happens, that trader in this example is already suggesting that the

market is going to confirm the upthrust at that point and send the price

downwards. Based on what?

As I say, approaching scenarios in this way has nothing to do with a correct

application of the Wyckoff method.

And in this position, we face the same problem.

Why would the market break out of the structure and generate the test that

lead to the downtrend?

Perhaps the shorter -term traders who were supporting the last bearish move

used that liquidity zone to close their positions and exit the market.

At that point, the downward pressure has eased and the market's reaction will

most likely be to go up due to the lack of interest on the part of those traders

to continue pushing downwards.

Why would this be the only possible scenario?

And note, I am questioning this after having seen the bearish movement, which

would make even more sense because the roadmap at that point would already

suggest the appearance of an upthrust and a sign of significant weakness that

has managed to break the structure at the bottom.

But even so, we must never only look at it from one perspective.

We must continue to actively assess the behavior of the market to see if the

signs continue to favor our scenario.

The problem is that the analysts who predicted this scenario did so at a

where they had absolutely no basis for doing so.

That is the difference. As I say, if we are at that point after having seen the

false breakout at the top and the downward movement, the predicted

would have been the right one.

But it doesn't end there. The worst thing I have ever come across is

like this.

Right at the same point, somewhere in phase B, some traders would already

that the market is going to develop an upthrust plus a sign of weakness that

will take the price to the lows of the structure, from where it will develop a

spring and then a sign of strength which will lead to a real breakout of the

structure and will be followed by a test and bullish continuation out of the

range. Come on, this is complete nonsense.

I hope that these examples have shown what you should absolutely never do.

The Wyckoff method, with its analysis of the context and its roadmap, forces us

to predict sound scenarios about the next movement, never beyond.

Based on what the price has been doing, we can assess the probability of a

certain movement developing subsequently.

And when that movement ends, we will be in a position to predict the next one,

and so on, without ever getting ahead of ourselves.

We don't want to try to guess anything, but rather to react quickly.

Only when the price is in a position of potential spring, and this is confirmed

by our analysis, we will predict the scenario of a possible upward movement

takes the price to the opposite end of the structure, and if it breaks out,

better.

And only when this movement develops in the way we expect it to, can we then

predict the next correction back to the level of the broken structure, and wait

for the break and retest that will give us confirmation.

And when we are in a potential BUEC situation, if the signs continue to be

our favor, we can then predict the subsequent trend movement outside the

but only at that precise moment and not before, at least not with enough

assurances.

This is the dynamic we should follow. It's not about inventing anything.

It is simply about following and evaluating the price action and volume

time. to determine what the next movement is most likely to be.

The why is simple, and the reasoning is found again in the underlying logic of

the adaptability of the markets. We do not know the intentions of the traders

that are supporting the current movement, nor do we know if traders with

capacity might intervene at any moment.