All language subtitles for 3. Continuous validation protocol

Continuous Validation Protocol Due to
the dynamic nature of the market, the

strength or weakness that its
participants exhibit at an aggregate

change at any time. And that is why we
must be prepared to react to these

changes. The way we deal with this
rapidly changing environment is through

continuous validation protocol.

It's about actively reacting to what the
market does.

This means that if the price does this,
we should then expect that.

This is the best way to know what the
price is likely to do at any given

and, as a result, to be prepared to act
with necessary speed.

The key here is to assess all possible
options that the market might develop

and, even if we are initially
directionally biased towards one side,

always also take into account an
alternative scenario in the opposite

enabling us to make a quick change if
necessary.

A good example is when the market is
moving towards the upper part of a

structure. This puts us in a trading
zone which could be situated in a

upthrust. Due to the context, it may be
the case that we are directionally

biased toward the bullish breakout
scenario and are therefore looking to

the breakout test since this is what the
context and roadmap suggest.

But if, when the time comes, what we see
is that the price re -enters the range

again, firmly refusing to go up and
displaying what looks like a false

an upthrust.

then at that point we should have the
capacity to interpret this in real time

and change our predicted scenario to
look for short positions.

Why? Well, because we know that the
roadmap at that point has changed.

As we have already discussed, we should
always align ourselves with the last

false shakeout.

The price could make a sharp reversal
downwards at that point, but as long as

does not re -enter the range, we could
stick with our bullish continuation

scenario. But with re -entry, everything
changes.

At that point, if the upthrust is
confirmed, the likeliest outcome is that

price will visit the lower part of the
structure.

We may be very bullishly biased because
we have seen a spring and a good sign of

strength that generates the bullish
breakout.

But it does not end there. The market
must continue to confirm that the signs

are aligned with a long position.

And we already know that the definitive
sign is the non -entry into the range.

So until we see at least an initial
reaction in the trading zone that

that the development of the break and
retest is probable, we must be very

of the possibility of this alternative
bearish scenario.

We know that different participants with
different capacities, needs, and ways

of trading coexist in the market, and
this issue is patently clear in this

of situation.

That is why our approach is reactive.

We should not try to anticipate the
market because when the key moment

we have no way of knowing what will
happen.

We may be seeing a very genuine
structure being developed, but this does

mean that it will definitely fully
develop as predicted.

The fact that the chances of success are
high does not mean that this will occur

100 % of the time.

That is why we must apply a continuous
validation protocol to the signs, the

roadmap, and the context.

The opposite would be true if, when the
time comes, signs continue to appear in

favor of the bullish breakout, which, in
this situation, would be a price action

that denotes a lack of interest in the
bearish movement.

This is why this last confirmation
action after the breakout is so

How do we confirm the bullish breakout?

Well, with a price action that denotes
lack of interest in the bearish

direction, and, of course, with the non
-reentry of the price into the range.

It is about constantly visualizing what
we want to see in order to stick with

the main scenario that is aligned with
the context and the roadmap up to that

moment.

We need to think in the following way.

If the price breaks the creek, then I'm
going to wait for it to perform a test

and look to buy.

If, on the other hand, there is a failed
breakout, then I will wait for a test

in the opposite direction to enter
short.

This is what the Continuous Validation
Protocol is all about.

Moreover, here the price develops a fast
trap -type pattern, generating a false

breakout on the previous pivot.

This is followed by a strong demand
candlestick or SOS bar, which would give

the entry trigger to go long.

This is the rationale we need to apply
to all the trading opportunities that

arise. Now, imagine that we are in a
potential spring or bearish breakout

situation.

How the price reacts after reaching the
liquidity zone is vital in telling us

which scenario we could favor.

It will be the last price action that
confirms or rejects the scenario.

Due to the dynamic nature of the market,
we must be aware that we may see

behavior that is in line with what was
initially proposed, but which is not

ultimately confirmed.

In this context, if we are leaning
towards the development of a potential

spring, we will want to see a strong
bullish reaction from the market that

the price back inside the range,
demonstrating that buyers have firmly

initiative upon the price reaching the
liquidity zone.

This combination of actions would lead
to a context in which we could expect to

see at least one impulse movement up
towards the highs of the structure.

An alternative scenario would be to see
a slight bullish reaction that fails to

re -enter the range and suggests that
the bearish breakout is potentially

accepted, which would lead to a context
in which we should expect the price to

go lower.

These are the two possible main
alternatives.

But what would happen if said price
movement, initially denoting a lack of

interest, finally continues to rise
until it re -enters the range again?

This is another possible scenario that
we have never considered before.

Could it happen? Of course it could.

So, if this is possible, we need to look
at it logically to see how we should

act if it does.

Analyzing the structure in absolute
terms, the price has visited the lower

has refused to continue falling, and
instead has re -entered the range.

With all this prior action therefore
appearing to be a potential spring,

The question now is whether said
behavior is indeed a spring and whether

the ability to tip the balance of the
market upwards.

From my point of view, of course it is
possible. In the market, anything is

possible, and objectively, that is what
seems to be happening.

At this point, we have to decide how we
are going to act in this context.

In my view, there are two options.

Either directly reject the opportunity,
casting doubt on both the bullish and

bearish scenario, or categorize the
opportunity as risky and trading with a

lower amount.

It could simply be an extended test
after the bearish breakout and then

the redistribution.

Or, it could be a bearish false breakout
that sets up a subsequent bullish

scenario.

For me, what happens in the trading area
at the support level of the structure

would be key.

To see this, we would simply have to
wait for the price to develop some type

test on it which allows us to determine
with a greater probability what will

happen next.

When we aren't sure how we should read
what we are seeing on the chart, we

should rely on the most objective
interpretation possible.

In this scenario, we can effectively
confirm that the potential spring does

meet the ideal characteristics of what
we are looking for.

We see that the price has reached the
bottom of the structure and the

interaction is made up of candlesticks
with a narrow range that denote a lack

intent. which we should initially
consider to be a sign in favor of the

scenario.

Nevertheless, the market continues to go
higher and even re -enters the range.

The only objective thing we can say at
that point is that the price has re

-entered and that in principle means the
last behavior was a failed excess, a

false breakout.

If, moreover, this is confirmed
subsequently with a successful test on

this would be a significant enough sign
that would allow us to reactivate the

bullish scenario, which we would
initially have discarded.

In the event that it is simply an
extended test after the bearish

would be crucial that we at no point see
a successful test of the zone.

If the market is genuinely unbalanced to
the downside, it would be strange to

see this test develop.

Also, any behavior suggesting weakness
that we observe, such as an upthrust,

would be a significant sign.

What happens in the trading zone is key
to giving more weight to one scenario or

another. That is why the continuous
validation protocol is necessary, to

all times what we want to see in order
to lean towards one scenario or another.

This exercise is very useful not only to
assess the various options that the

market can offer us, but also to
illustrate examples in which the signs

very reliable.

resulting in a trading approach with
fewer assurances.