All language subtitles for 7. Proactive position management

Proactive Position Management We have
now reached the final section of the

course. In this module, we are going to
use all the concepts we have looked at

so far to establish the entry, the stop
loss, and the take profit with examples

at each of our trading zones.

The key to proactive position management
is that, because we know the market is

dynamic and conditions change, control
can continually swing from one side to

another. And we don't want to be in the
market when it could turn against us.

Moreover, we must continually adapt to
new behaviors that are generated once we

are in position.

Let's start in a situation in which we
are in trading zone number one, in which

we can see that there is some momentum
inside a trend and we are looking for a

basic correction before entering.

The drawback of this sort of trade is
that we would not wait for the

of a fast pattern that generates the
reversal and might give rise to the

continuation of the trend movement.

but rather we would enter the market
immediately after observing the change

character that is generated in the short
term, due to the concept of a reversal

movement.

Therefore, the fact that this type of
trade doesn't involve waiting for at

one fast pattern means it is more
likely, in a way, to be adopted by an

aggressive trader rather than a
conservative one.

Analyzing the chart, what we observe is
that the market has developed a

structure further up, which may not
necessarily be textbook in its shape,

the end it has generated a strong
bearish momentum.

This is the key.

You may not have been able to trade the
distribution structure due to its

erratic behavior, but after seeing the
impulse movement, you now know that the

context is bearish.

The impulse movement is clearly being
accompanied by an increase in volume,

which suggests that there is harmony in
this movement.

And, at the same time, we see that the
bullish movement, which in principle we

should treat as a correction, carries
low and declining volume, just as we

expect, which means that at an overall
level, this behavior comprised of a

bearish momentum and bullish correction
denotes maximum harmony.

We also see that the price reaches the
upper end of the dynamic that we have

drawn using the linear regression tool,
that is, in the trading zones at the

extreme of the dynamic.

This point is important because, as we
know, in trend trading, when we are

looking for a basic correction, there is
no pre -established trading zone since

we are looking for the trigger after the
reversal of the movement.

Therefore, it should be mandatory that
in this context, the price should at

least reach this extreme of the dynamic
before considering an entry.

Another input in favor of the bearish
scenario would be the break of the last

bullish dynamic corresponding to this
correction.

And finally, we have the appearance of
that large candlestick showing bearish

intent that breaks through the low of
several bullish candlesticks.

denoting a strong participation of
sellers.

At that point, we already have
everything we need and it is time to

orders. In this case, we would establish
a short entry order below the low of

the trigger candlestick using a sell
stop.

With respect to the stop loss, we could
place it either at the high of the

trigger candlestick or, depending on the
scenario, above the behavior as a

whole.

With respect to profit taking, The first
liquidity zone we identify is at the

previous lowest point, which is the
extreme of the bearish momentum.

Therefore, in that area we should do
some kind of management. Since there is

enough distance for the price to travel,
I would take a portion of the profits

and protect the stop at break -even.

As we can see, the trade developed in
our favor and the second take profit

should have been taken after the
appearance of that first volume peak,

would have a tidy final profit.

And what would happen now with that new
upward movement?

It would seem that we are in the same
situation as before.

So should we expect a bearish
continuation?

Well, there are several things we need
to analyze here.

If we adapt the regression channel to
the new levels, we again see that the

price would be at the extreme, in
exactly the same position as in the

trade. In addition, It also coincides
with that axis line that would identify

old support at the end of the bearish
momentum, which could now act as a

resistance level, and that indicates
that the trend is following a normal

of behavior.

These would be the major inputs in favor
of the bearish scenario.

But what inputs do we have against this
scenario?

To begin with, and most importantly,
this asset is the S &P 500 in a two

time frame.

and that climatic volume that we saw
corresponds to the opening of the

We previously commented that this moment
is quite delicate due to the high

volatility. The recommendation was to
wait at least 30 minutes before

considering a trading approach.

With this logic in mind, we would not
have already taken the position.

As well as this, we need to also ask
ourselves if it is possible that the

of the cause has already been covered.

In other words, If we have seen a large
enough movement in one direction after

the development of a structure, the
market may need more fuel to continue

moving. In other words, it might need
another cause before moving forward.

If you look at the chart, the
distribution structure doesn't really

much of an influence given where the
price is.

Therefore, the idea of a continuation of
the bearish scenario should have been

discarded. and what happened next is
that this movement was indeed exhausted

a new structure developed.

In this case, said cause was an
accumulation which generated a

bullish effect.

See how much volatility is generated
after the opening of the session?

With sharp up and down movements,
leaving long wicks at both ends, and how

there more genuine movements begin to
develop.

It is certainly a behavior that we
should avoid at all costs.

Let's now look at trading zone number
two, in which we are looking for a major

correction within the trend.

Here is another bearish example, in a
situation very similar to that of the

previous example.

Again, at precise moment we are looking
at we should be clear that the context

is bearish because it is determined by
the distribution, and that the roadmap

tells us to expect a continuation of the
trend movement until we see signs that

the control of the market may be
changing.

Once we are clear that what we want to
do is sell, we have to look for a

zone higher up where we should wait for
the price.

In this case, we wait for the appearance
of a maximum pivot that will give us a

liquidity zone.

If the price were to reach that level,
we would find ourselves in a confluence

zone since it would also reach the end
of the bearish dynamic, which again we

have been able to identify by drawing a
regression channel.

This would be our main scenario.

As additional inputs that favor going
short, we can see the emergence of a

candlestick showing bearish intent and
how the market subsequently starts to

move sideways, indicating an acceptance
by the participants to trade at these

new price levels.

Subsequently, the price continues to
fall, thus confirming that all this

that has appeared has bearish sentiment.

Another possible scenario is that the
market does not generate a false

at that pivot point that we have
identified and that the downward

continues immediately.

In that case, our roadmap would involve
waiting once again for the generation of

another pivot and its subsequent false
breakout before joining in the bearish

movement. And finally, another
possibility is that control of the

change and the price could reverse with
a great deal of bullish intent.

This would be the alternative scenario,
the bullish one.

Our task here is simply to wait for the
price to confirm the expected scenario.

Let's take a closer look at this
alternative bullish scenario.

It may not happen in any case, but we
must be prepared for any situation.

At what point, if the bullish reversal
occurs, would we be willing to consider

going long? Well, at that point where we
are at least above the last bearish

candlestick, which we identified as
having extremely high volume.

Right at that moment, we could already
say that the volume is in our favor and

therefore determine that control is
bullish.

In addition, Waiting for a test in that
area would coincide with the highs of

the previous structure, so this
confluence of levels would identify a

probability trading zone.

But look, what finally happens is the
main scenario.

The false breakout of that liquidity
zone and a sign of weakness with the

closing at the lower end of the last
bullish candlestick that would establish

control, and which also closes below the
bullish dynamic that we have identified

by drawing a new regression channel.

In terms of analyzing the law of effort
versus result with respect to movements,

we can see that the pattern impulses and
corrections is harmonious, both in

price and volume.

Increased volume on impulse bearish
movements and decreased volume on

bullish movements.

At that point, there are already a large
number of inputs in favor of the

scenario. So, we launch the orders on
the market.

In this case, as with the previous
example, It would be the sell stop order

the breakout of the low of the trigger
candlestick, placing the stop loss on

other side of the behavior as a whole
since the difference between the high of

the trigger candlestick and the high of
the entire scenario is minimal.

So, we could choose to establish just
one stop loss.

And with respect to profit taking, we
identify the liquidity zone below and

establish our first partial take profit
there.

If the price reaches that point,
automatically protect the position by

the stop loss to not lose money.

The position advances and generates that
new liquidity zone.

Initially, we did not have a second
clear objective, so we are going to

the behavior of the market and we would
use that new zone to close the rest of

the position.

If we feel confident in this trade, we
could leave a small part of the position

open and let it run from there.

And finally, the whole movement
developed in our favor.

Had we left a small part of the position
open, it would have been closed in the

appearance of the climatic volume.

At that point, the bearish run has
already been long enough to suggest that

has been definitely exhausted.

And surprisingly, the market continued
to slide.

It even left another opportunity in that
new upthrust.

This is a good example that illustrates
how our assumptions matter little to the

market. We might think that the movement
is already quite overextended, and yet

it may still continue to move in that
direction, as has happened here.

We might think that the distribution
pattern has no effect left and be

completely wrong.

We don't care.

What interests us is that we properly
manage our position and always favor the

behaviors that are most likely to
happen.

In this case, and under these premises,
That last false breakout would not have

been taken after seeing that the
movement was extended enough that it

offer us the necessary guarantees.

It is a different matter if, at that
point, we were to observe the

of a slower structure.

There things changed because implicitly
that structure could suggest that a new

cause is being generated in favor of the
same direction.

We would have to analyze this structure
individually.

The basic premise regarding trend
trading is that the market will continue

move in that direction until an opposite
cause is generated that can reverse the

sentiment. But that doesn't mean that
the anatomy of the trend can't offer us

more or less confidence, and a very
overextended trend is not something we

to see if we want to trade in that
direction, because the further the price

moves in one direction, the sooner it is
likely to reverse.

That's why it's generally best to avoid
joining a trend that visually seems

extended.

Early in the trend, it may be a good
idea to enter the market looking for a

simple reversal of the movement. As it
progresses, it is better to wait for a

larger correction in the form of a fast
structure, and then in more advanced

stages of the trend, the ideal thing
would be to wait for the development of

more complex schemes, fully developed
reaccumulation, and redistribution

structures.

Let's look now at trading zone number
three, trading at the extremes in phase

In this case, we start from a situation
in which we have already identified the

three events that stopped the previous
trend, which for this example are the

selling climax, the automatic rally, and
the secondary test.

From this point on, we know that
liquidity zones are created at the

the structure.

Since the previous trend is bearish, I
would personally only recommend trading

in this direction because there is most
likely still a certain downward

imbalance. And even in this context, we
should expect the structure that is

developing to become a redistribution
rather than an accumulation.

As I say, we are biased by the direction
of the previous trend.

With this in mind then, our main
scenario would involve the price

top of the structure and generating a
false breakout there.

The key here is that we should only
consider trading this scenario.

The market could continue to fluctuate
within the range or go visit the lower

end. But at this point in the
development of the structure, the most

approach would be to look for a false
breakout at the upper extreme.

And right at that moment the false
breakout could occur, though personally

have my doubts.

To begin with, the bearish candlestick
that would serve as an entry trigger

not denote all the bearish intention
that we would expect it to, since its

closing price is in the middle third of
the previous bullish candlestick.

We can also see that up to now it has
been unable to break the bullish dynamic

that would establish control of the last
movement.

In other words, although it is true that
this position could be taken, it would

involve greater risk since not all the
inputs are aligned in this direction.

Therefore, it would be a trade for a
more aggressive trader.

A more conservative profile would wait
for the break of said dynamic and would

look for the development of the false
breakout test of the trading zone.

And if the entry trigger appears there,
they might consider going short.

This would be our main scenario.

What other outcomes could there be?

Well, a scenario in which a long bearish
movement develops without any type of

test, which we should look to trade in
if we see the generation and false

breakout of a new pivot.

And another alternative bullish
scenario, which would be based on the

of the structure at its upper extreme,
which would activate the bullish roadmap

and all this behavior would be seen as
fast accumulation structure.

The continuation of this potential
bullish scenario we already know would

involve first looking for the test after
a successful breakout and from there

executing a trade in the upward
continuation movement.

This is what it means to carry out
proactive management, to continuously

the performance of the market and assess
the different options that are

presented to us.

Based on all this information, launch
our scenarios and wait to see which one

confirmed by the market.

And here we see that finally the market
confirmed the test after the false

breakout scenario.

At this point, the opportunity fills us
with greater confidence.

The last bullish trend has already been
broken and the candlestick showing

bearish intent closes below the last
bullish one, so the short -term bullish

control would also be in red.

Waiting for this type of behavior to
happen is ideal when the first

doesn't fill us with a lot of
confidence.

This trade would therefore be suitable
for a more conservative trader.

Reviewing the operational checklist, the
context and roadmap are in our favor.

We are in the trading zone.

We have an impulse movement in our
direction, which we identify in the

bearish reaction after the upthrust,
which is also the movement that manages

break the bullish dynamic.

We don't see any bullish dynamic impulse
movement that denotes much strength.

The bullish false breakout took place at
the very edge of the structure and was

significant enough, and the
proportionality of the phases seem

should be confident that the trade will
be successful.

With respect to the location of orders,
the entry would be a stop -type order at

the breakout of the low.

We could use the two stop -loss
locations, a more aggressive one just

pivot that generates the trigger
candlestick, or a more conservative one

the very edge of the structure.

Meanwhile, regarding the reward, the
most ambitious target would be that the

price manages to reach the opposite end
of the structure.

But if you look closely, right in the
middle of the range we have identified

another minor liquidity zone, which
should also be taken into account.

In other words, when it is reached, we
could do some kind of management, either

simply protect our position or take a
partial profit.

Why would we consider only the opposite
extreme as the most ambitious target?

Couldn't this false breakout actually be
the test event in Phase C that

generates the complete imbalance of the
structure?

Well, of course, we can do whatever we
like.

But my reasoning is that, in a structure
that is already confirmed, that is to

say, where it is obvious that a change
of character has occurred, in which we

have gone from a bearish trend state to
a sideways one, the likelihood is that

the price will spend some time building
the subsequent cost.

Therefore, the most likely to occur at
this point, if the market reaches the

lower end, is that it will find new
demand that will generate a subsequent

reversal until finally the agents
consider that this equilibrium no longer

represents the fair value of the asset
at which point it will generate the

definitive false breakout that will
unbalance the price but if you are not

about it you can always leave a small
part of the position in case it turns

that this false breakout is actually
going to generate the definitive

of the structure

And here we see how it reaches the
bottom of the structure and bounces

again. Careful, because this could be
the false breakout that generates the

definitive imbalance, in which case we
would find ourselves in trading zone

number 4, reverse trading looking for
the phase C test event.

If you remember, how do we confirm a
potential spring?

We saw at the beginning how the two
minimum inputs that we are going to

from the price before we start treating
this behavior as a potential spring is

firstly, that it re -enters the range,
and secondly, that it does so with good

candlesticks, showing bullish strength.

In this example, at the end of the last
bullish candlestick, we could assume

these two requirements have been
fulfilled.

But as happened before, the trigger
appears before the break of the bearish

momentum, so this already means it is a
riskier type of trade, one for a more

aggressive profile.

Moreover, another input that would
undermine our confidence is that the

pattern of volume decrease doesn't
appear throughout the entire development

the range, although it can be seen in
the first part.

Although it is true that the last
candlestick is already above the last

bearish candlestick, the first bullish
candlestick that appeared did not denote

great strength as it closed in the
middle third of the bearish one.

So we have another sign that doesn't
denote all the aggressiveness that we

ideally like to see.

In general terms, the number of inputs
from our checklist in our favor is low.

Despite this, if we were still looking
to buy, we would use a buy stop at the

break of the bullish candlestick, with a
stop loss that could be placed at two

levels, below the low of the bullish
candlestick and below the whole

In terms of the take profit, the false
breakout presents us, in general terms,

with three targets that we should take
into account when making decisions

depending on our trader profile.

The minimum objective we want to see of
a false breakout is a visit to the

nearest trading level. The intermediate
objective will be the opposite end of

the structure, and if we are observing
this event in phase C, it will give rise

to a real breakout and subsequent trend
development outside the range.

So the most ambitious objective will be
to take advantage of this effect and go

looking for an old trading zone that is
in the distant past of the current

structure.

In this example, we would have several
locations.

In the first place, we would take
profits when reaching the first

zone, and the second part would be left
in case the price reaches the high of

the structure, where we would find two
areas relatively close to each other and

which, at an aggregate level, represent
an important supply zone.

And since we could be seeing the start
of the definitive imbalance of the

structure, we should probably leave a
small portion of the position in case

accumulation is confirmed and the market
takes off looking for prices higher up.

An alternative scenario would be to
favor a real bearish breakout, for which

already know that we would look for a
certain reaction to appear at the lows

the structure that would prevent the
price from effectively re -entering the

range.

At this point, we already have a better
understanding of the situation, and the

bullish scenario looks more likely since
the bearish dynamic has been broken,

which is an important sign of that there
is intent from the buyers, and

ultimately this might be confirmation of
a spring.

At this point, we can put forward our
hypotheses and predict our scenarios.

The roadmap here is bullish.

Therefore, there are several ways in
which the market could develop a bullish

continuation.

It could go higher straight away with no
consolidation, in which case we would

miss the chance to take advantage of
that potential movement.

Another option is that it develops a
horizontal consolidation at some point.

And the other option in the bullish
scenario would be to wait for the spring

test on the lower part of the structure.

These would be the three bullish
scenarios.

And the alternative scenario would be
the bearish one, which would become

apparent if at some point we were to see
the bearish breakout of the structure.

What would happen if scenario number one
were to eventually unfold and the price

goes straight up?

We would miss the chance to take
advantage of this movement, but that's

Because if this happens, we would have
more opportunities to try to take

advantage of the next one.

And in that case, we already know that
these opportunities would reside in

waiting for the test after the bullets
breakout in anticipation of higher

prices.

How will we act if consolidation
scenario number two develops?

Well, our scenario here would be to wait
for the creation and false breakout of

a possible pivot before looking for the
entry.

And with scenario number three?

Well, simply wait for a correction to
the trading zone at the bottom of the

structure and there look for a behavior
that allows us to confirm the spring

test.

This is the key. This is our task.

To put forward all the possible
hypotheses and let the market decide,

advantage that we will be ready and
waiting to trade depending on what

occurs.

And as we see, of all the possible
scenarios, the market appears to be

developing the search for the spring
test scenario.

How did we confirm the spring test?

We established that we can confirm the
point of the spring test at the moment

when the price breaks the previous high
generated in the spring.

That would be the point at which the
behavior would offer a greater guarantee

success. But we can also make use of the
concept of movement reversal if we want

to look for early confirmation, for
which we would wait for the appearance

good bullish candlestick whose price
closes above the last big bearish

candlestick.

Which is exactly what is happening here.

In the potential spring test behavior,
the price reaches the minimum of the

structure and generates a candlestick
with strong bullish intent that breaks

highs of several bearish candlesticks.
So we could initially accept this as

confirmation of said test and it would
set us up with an opportunity to enter.

In addition, during the development of
said test, a pivot was generated which

the price subsequently broke through,
filling us with even more confidence

that particular trigger.

At that point, the number of inputs in
favor of the scenario increases.

so we could now give the green light to
the trade.

As always, we would place the buy order
at the breakout of the low and we could

establish two stops, either below the
trigger candlestick or below the lowest

point of the entire scenario.

Another option would be to place the
stop loss below the low of the spring,

that would be too far away, so I would
discard this alternative.

In terms of taking profits, During the
last development, the price has

a new liquidity zone, so some form of
position management should be taken

What I would do here, given the
closeness of that zone, would be to

change the stop to break even and not
take any profit, which I would initially

allow to run until the supply zone at
the top of the structure is reached.

As with the previous entry at the
spring, a small part of the position

allowed to run on in case the
accumulation pattern is successful, and

and manages to break out upwards.

An important point regarding the spring
and the spring test.

If, after these behaviors, the price
starts to move quickly with candlesticks

denoting strength, it will most likely
reach the top of the structure without

much difficulty.

But if, on the contrary, we start to see
an unclear price action, it is most

likely that we will see at least one
more test before the price goes up. We

even see a new false breakout.

If we have seen a potential spring or
spring test and we have entered the

and the price does not begin to move
quickly in our favor, it is best to

our exposure, adjust the stop loss, or
directly abandon the position.

The key, again, is to preserve our
capital, and if we have enough signals

suggest our stop loss is likely to be
reached, we should reduce risk as soon

possible. This is what proactive
position management is all about.

It involves identifying new trading
zones that are being created so we can

modify our take profits accordingly and
also being alert to possible changes in

sentiment so we can modify our stop
loss.

Finally, what happens is that the market
is unbalanced upwards and in this

context we would now find ourselves in
trading zone number five, continuation

strategy within the range in phase D.

The zone to look for trades here
encompasses the entire interior of the

The only opportunity that the market
would have offered us in the upper part

the structure were the price generated a
pivot and a subsequent false breakout.

The trade would be of a high quality, if
it were not for the fact that it occurs

in a very high part of the structure.

The problem is that if we enter there,
we are too close to the large liquidity

zone established at highs, so there
would be very little room for proper

management.

It is true that our context and roadmap
suggest that it is highly probable that

the accumulation pattern will continue
to develop, and therefore that the

breakout of said zone will be a real
one.

This is something that our analysis and
scenario planning may suggest, but it is

not something that will always happen,
and in any case, if we are correct in

analysis, there will be more
opportunities later on to enter the

advantage of the movement that has yet
to be generated.

So at that point, the main scenario
would be to wait for the price to

effectively break out of the structure
upwards.

Once broken, we would propose different
alternatives in favor of the bullish

scenario, the main one being to favor
the test after the breakout, for which

should see certain acceptance of the
movement with candlesticks that indicate

lack of intent.

Meanwhile, another scenario, as we know,
would be to see a new false breakout in

the liquidity zone that manages to shift
control of the market again, and makes

the price re -enter the range, in which
case the bearish roadmap would be

activated. And here we see how the
opportunity we are waiting for appeared.

The main bullish scenario involving two
movements materialized and just before

the zone it even generated a small
pivot, then on which there was a false

breakout before the bullish candlestick
appeared.

At this point in the trading zone where
we would be looking for the breakout

test, there is no need to wait for the
creation and false breakout of a new

pivot. If we see that the price arrives
with some loss of momentum, denoting a

lack of interest, we could look directly
for the entry trigger.

On the other hand, if the movement that
is going to develop the test arrives

with certain momentum, then it would be
advisable to wait for the appearance of

some pattern that would show the loss of
momentum.

At that point, we can see several inputs
in favor of the scenario, so it is the

type of trade that should fill us with
the greatest confidence.

At that point, We have already seen the
spring at the lows of the structure, the

sign of strength that has traveled
across the entire range and that has

broken out the structure above.

We do not have any strong movement
against. The impulses and corrections

be in harmony, and there is
proportionality between the movements.

So we are now in a position to confirm
the breakout with the non -reentry into

the range and the appearance of the
entry trigger on the trading zone that

denotes strong intent in our direction.

Because of all these factors, we could
take the trade.

The entry order would be located at the
high of the trigger candlestick.

The stop loss would be placed below the
low of the behavior as a whole.

And in terms of profits, at the break of
the previous high, we could place our

first take profit or simply manage the
position and let the rest of the

run on until we see signs that suggest
that a change in market control is

possible.

In the end, the market seems to have
confirmed the accumulation since it

continued its upward development
satisfactorily.

From that point on, we would find
ourselves in trading zone number 7,

continuation of the trend in phase E,
where we would look for the creation of

pivots and subsequent false breakouts
before entering the market in the

direction of the imbalance.

And as always, we should keep in mind a
potential alternative scenario in the

opposite direction, at the point where
the price is.

what would we need to see it do in order
to discard the bullish idea and begin

to consider the possibility of selling?

Well, it would at least need to re
-enter the previous structure again.

At that time, all the test price action
could be treated as a major false

breakout of the structure, which would
activate the bearish scenario.

Where the roadmap would now suggest that
we wait for a test on the high part,

which would send the price down through
the entire structure until it reaches at

least the low end of the range.

Remember, we always propose different
ways in which the scenario can be

represented in the main direction, and
also another hypothesis that

the scenario in the opposite direction
in case our analysis is incorrect or an

unexpected imbalance occurs in the
market that causes a shift in control.

Just a small point about this
alternative scenario.

You might think that it would be much
more beneficial to try to take advantage

of the alternative bearish scenario in
the event that a re -entry below the

previous high occurs.

in what I have identified as trading
zone 1.

At that point, we might already have an
even smaller minor distribution

structure, right?

The problem with this approach is that
objectively we would still be above the

structure, and technically until the
actual re -entry to the range occurs, we

shouldn't start to consider said
alternative scenario, even if we see

of a potential distribution pattern.

Don't forget this term, potential.

Also, Remember that the market loves to
send false signals.

Just be clear that our point of no
return will be if the price re -enters

range. From that point on, we would have
a better guarantee of considering an

opportunity to sell in that case. The
trading zone on which we should wait for

the price is number two.

But beware.

Even if the price has re -entered the
range, all is not lost.

This example shows exactly that.

Let's imagine that we find ourselves in
this situation.

a potential test after a bullish
breakout.

Although it is true that the bearish
movement has arrived with a lot of

momentum, the price subsequently
develops a fast pattern and even a false

breakout. In addition to a bullish
trigger candlestick that denotes a lot

strength, so, aside from the fact that
the last dynamic was not broken either,

suppose we decide to enter with at least
part of the position so we place our

orders.

And it turns out that the market
activates the entry order for us and it

again, also reaching our stop loss, as a
result of which we would take a loss.

At that point, the market has re
-entered the range long enough to

there is a change in bias and propose
the test after a breakout of the trading

zone scenario.

That would now be our main scenario.

And look what happens.

It has penetrated beyond our trading
zone, but again found enough demand to

aggressively push the price even beyond
the level.

That's why I always say that each market
action must be confirmed or disproved

by the subsequent price action.

The action we were trying to confirm at
that point was the false breakout.

And how do we confirm this? Well, after
seeing a test in the trading zone, a

test that preferably denotes a lack of
intent to continue rising.

And what finally happens is that this
scenario does not occur and therefore

false breakout action is rejected.

This is proactive scenario management.

And now what do we have?

Well, we are now in the opposite
direction, in the same situation as at

beginning trying to confirm the upward
movement through a test on the trading

zone.

That would be our main scenario now.

On the other hand, to activate the
alternative bearish scenario again, we

need to see the price drop below the
zone and re -enter the range again.

And there might be the confirmation that
we were looking for with that precise

test on the trading zone and the
appearance of a large bullish

We could certainly now execute the trade
with greater assurances.

The only negative aspect is that the
trigger candlestick travels a long

distance, so our stop loss will be
further away.

This is not a big problem in terms of
potential profitability.

because if we are right about our
scenario, the structure should still

the effect of the accumulation.

In the end, the price moved upwards, and
from that point, we would find

ourselves in the middle of the uptrend,
where we would look for the creation of

pivots and their subsequent false
breakouts before entering the market in

direction of least resistance.

This final example deals with the
strategy of trading during the

a trend.

Imagine the price has just broken out of
an accumulation structure.

What scenarios can we foresee?

The context at that point we already
know is bullish.

Therefore, our main hypotheses should be
aligned in that direction, with an

alternative hypothesis based on the
opposite direction, in this case,

Therefore, three potential scenarios
come to mind.

The first that the price will develop a
test of the trading zone to confirm the

bullish breakout.

The second, that it won't go down to the
trading level and that it will develop

some form of horizontal consolidation
pattern.

The third, that the upward imbalance
will continue with no pause at all.

And the fourth and final scenario, the
alternative one, that the price will re

-enter the range sharply and that last
behavior will end up as a potential

bullish false breakout or upthrust.

As we can see, the price continued to
rise even more.

and therefore developed in line with our
third scenario.

At this point, the possibility of the
bearish alternative scenario is becoming

less likely due to the distance the
price has already traveled.

Therefore, the scenario we should
prioritize would be some type of

or minor reaccumulation structure before
the price continues in the direction of

the bullish imbalance.

Finally, the predicted scenario seems to
have materialized. The generation of a

pivot plus its false breakout.

supported by a strong bullish
candlestick that would serve as an entry

On top of that, we are at the edge of
the bullish momentum.

We see that there is some
proportionality between the impulse

corrections. The volume follows a
harmonious pattern.

We are supported by a strong bullish
movement and there is no bearish

going against it, and the potential
spring event is, as we would hope to see

with the trigger candlestick closing
above the trading level, and in the top

third of the last big bearish
candlestick.

While it is true that the last bearish
momentum has not yet been broken, this

trade certainly offers a high
probability of success.

It is about analyzing the inputs for and
against, and being objective.

The fact that the dynamic has not yet
broken seems to be the only input

our scenario.

My point of view here is that we have
enough signs in our favor to execute the

trade with some reassurance.

If, in any case, this particular input
gives us a greater confidence, we can

wait for that break in momentum to
happen before assessing how to enter.

Regarding the orders, the entry level
will be as always at the break of the

bullish candlestick. The stop loss would
be located below the minimum of the

entire scenario and in terms of targets
if we find ourselves taking advantage of

an uptrend.

A more ambitious target would be to
identify the most immediate structure to

left above the price.

As intermediate targets, my
recommendation is that we take some type

profit in the liquidity zones or trading
levels in which we find ourselves to

ensure we don't miss out of a potential
profit if the market reverses.

If we don't have a reference structure
we can use, we would have to employ the

other methods that allow us to detect
whether there is increased participation

from the opposite side such as the
evidence provided by climatic

the development of a structure that goes
against our interests.

The market developed upwards and reached
the first two suggested trading zones,

the liquidity zone and the previous
structure.

From there, and if we think that the
effect of the cause might already have

exhausted, we should use appearance of
climatic volumes as early clues that

indicates a possible shift in the
market.

In this case, we can see that several
extremely high volumes have developed in

that area, the one marked on the chart
being especially striking since it

indicates a huge divergence between
effort versus result.

This is a candlestick with a narrow
range and a closing price far below the

highs, so that peak in volume could
signal a major entry of sellers.

This is reason enough to carry out a
more aggressive form of position

management, either placing the stop loss
closer to the current price or

immediately closing the position.

And now we have reached the final part
of the module.

We have looked at examples for
accumulation patterns, but we know that

equally valid for distribution
structures.

Absolutely nothing changes except the
direction of the position.

The crucial thing to remember is that we
always have several options.

Our job is to consider all the possible
scenarios that come to mind, and after

that it's up to the market to confirm
which one will, if any, be executed.

and to be fully alert to scenario
management so we can activate one or the

as appropriate.

We have used all these examples to put
into practice one of the most important

lessons, which is to determine when our
predicted scenario is no longer valid

and what we would need to see the price
do in order to activate the opposite

scenario. Remember that each market
action must be confirmed or disproved by

subsequent price action.

This will help us at all times to
maintain a flexible mindset.

Finally, my ultimate goal has been to
teach you to read the market in real

to open your mind and to be able to
suggest different scenarios with

probabilities depending on the current
market situation, all with the sole

purpose of knowing at all times what you
are going to do based on how the price

is behaving.

To do this, you have a trading checklist
that will help you focus on looking for

the most decisive signs.