Original subtitles

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.