Original subtitles

Climatic volume at the breakout.

The appearance of climatic volume is an important enough action in itself to

make us take note and reassess at the precise moment the implications that it

could have on the future reaction of the price.

As we know, it is impossible to guess what the market will do.

We cannot know in advance what the reaction will be.

However, we can control what we will do depending on said price reaction.

The only thing we have control over is our actions.

So it is best to be clear about what we are going to do in each of the potential

situations that may occur in the market.

We are going to approach the situation from three different points of view,

depending on where we see the climatic volume, before, during, or after a

breakout event of the structure.

It is crucial that we understand the differences that underlie each of the

scenarios, because this will be the basis for defining what we will do.

The basic idea is that if we have already seen climatic volume prior to

breakout and it's in our favor, this is a positive sign that adds strength to

our scenario in that direction.

If the climatic volume appears just at the moment of the breakout, this isn't

necessarily a bad sign.

It may be an absorption prior to moving in that direction, so we will have to

wait and see how price reacts.

Finally, if we see climatic volume after the breakout is complete, we should set

aside the continuation scenario, at least momentarily, until we see more of

subsequent price action.

Let's look at each of these situations in more detail. If at any point in the

structure we see that climatic or relatively high volume has previously

and that it is below the current price, this definitely has bullish

implications, at least in the short term, until something happens that

the valuations of the agents.

And we should start searching for opportunities to buy.

based on the premise that we are supported by that volume that is below

which is able to establish bearish control.

The reasoning is simple. If high volume has appeared and the price has

subsequently risen, we can assume that the short -term control is bullish as

long as the market continues to be positioned above said volume.

The volume is supporting the current bullish move and as long as it doesn't

diminish and or some type of event occurs to counter this action, the most

likely scenario is that the market will continue to go higher.

In this example chart, we see two relatively important volumes which

taken into account.

The second is more relevant than the first due to its location, because it

appears in a potential spring area and could give rise to an upward imbalance.

The key here is that everything above the high of both candlesticks, basically

everything within the orange box I have drawn, should be taken into

consideration when looking for a buying opportunity.

We would be supported, among other things, by the aforementioned volumes,

would be below and therefore would allow us to assume that they are in favor of

the upward imbalance.

Let's imagine now that we are right at the moment of the bullish breakout. The

price is entering a critical zone, where presumably the expectation is that

there are a large number of limit orders pending execution.

I always recommend doing some type of management at this point for this very

reason. Take profit or protect the position, because we do not know the

that the interaction between supply and demand that will happen there might

have.

We are at the critical point, real or false breakout, and at that point we see

the appearance of a large volume peak. What is happening?

Unfortunately, we are not fortune tellers and we will have to let the

react before drawing our initial conclusions.

The only objective thing we know is that a great deal of participation has been

generated. Lots of buyers and sellers, or a few, but with major trading power,

have executed orders with different intentions.

The opening of positions under the premise of a breakout strategy, closing

long positions in order to take profits, and closing of short positions due to

the triggering of stop losses.

We don't really know what's happening. That's the problem with order matching.

So what implications does all this interaction have?

Is it a bullish or bearish sign? We cannot know, at least in the first

We must let the price react.

Remember, each market action must be confirmed or disproved by the subsequent

price action.

At this point, in real time, both scenarios are equally valid.

It could have bullish connotations if we assume that the volume we see is in an

absorption volume.

following the premise that buyers have had to demonstrate their strength and

commitment by absorbing all the sell orders that were pending execution with

sole purpose of pushing the price even higher.

It is a price that buyers must pay at the aggregate level if they want to go

down that route.

But it could also be a major increase in supply, aggressive selling with the

intention of pushing the price down.

This uncertainty is what makes these trading zones critical points where

proactive position management is crucial.

If, after observing the volume, the price reacts by not maintaining the

and quickly re -entering the range, this is confirmation that the implications

of this volume were bearish.

That this high volume of trading mostly involved traders taking short positions,

and it has even continued to push the price down.

And we already know the context and roadmap that this kind of behavior

to us.

But if instead, the price manages to stay above the trading zone and shows

of acceptance at these new price levels, this suggests that this price discovery

is being accepted and the most likely outcome at that point is the development

of a bullish continuation.

The price may even develop a minor upthrust at that point, as shown in the

example. My recommendation here is not to be alarmed and continue prioritizing

the context.

As long as the price doesn't leave the trading zone, we should continue to

expect the development of a potential accumulation.

The key takeaway here is that if you see relatively high volume in that zone,

this isn't necessarily a good or bad thing.

It doesn't have to be a bullish or bearish sign by default.

Everything will depend on what happens subsequently with the price reaction.

The volume offers an explanation for both scenarios.

Don't be scared by this action. It's normal.

If I'm in a long position, I'm not necessarily worried about seeing

higher volume at this point, especially if the price subsequently continues to

behave in a way that may suggest a breakout, evidenced by price action and

volume, which denote a lack of interest in this potential test movement.

Finally, we are going to analyze the connotations of a volume peak after the

price has broken out of the most critical trading zone and managed to

few more points.

Imagine that we are in what presumably could be the end of the bullish impulse

movement, and just at that point there appears to be a very high volume or

relatively high compared to what has been observed previously.

Based on the premise that markets move in waves, and as we are aware that the

price has just developed some upward momentum and traveled a certain

it would not be unreasonable to think that a bearish turn in the market could

generated right at this point.

Although it would be perfectly logical to expect this kind of movement based on

the context provided by the principles of the Wyckoff method, for which we

expect a bearish movement to develop the test after the bullish breakout, the

fact that we can see high volume right at the high could be a negative sign for

bullish interests, especially if subsequently this downward movement that

have just mentioned does indeed occur.

Following the previous logic about the current position of the price with

respect to the moment the volume appears in this case, we would be below said

volume. Therefore, we would establish the hypothesis that as long as the

continues to be positioned below it, the control in the short term is bearish.

The bearish movement that we would be seeing would be the effect and the high

volume of the cause.

This is definitely not the ideal situation that we want to see at a

it could make us have our doubts.

In any case, everything would continue to depend on seeing how this potential

test develops after a breakout from the trading zone.

The key in this situation is to see whether the price re -enters the range

not. And this example is particularly interesting because the price was even

sustained above the trading zone and managed to avoid re -entering the range

several occasions.

But after seeing the final outcome, we have to assume that this volume had

enough capacity to unbalance the market downwards.

Whenever we are below a climatic volume, we must assume that the control in the

short term is in that direction, and only start looking for trades in the

opposite direction when the market turns to the other side of that volume.

In this example, I would personally only reactivate the bullish scenario if the

market were to position itself above the high of the candlestick generated by

the climatic volume.

That would be the point at which we can logically assume that volume is

supporting the current bullish movement.

a very interesting module offering us more inputs, which will enable us to

define where the price is most likely to go.

Obviously, the concept is equally valid for both potential accumulation and

distribution structures.

It is key to keep in mind that the volume provides us with very important

information about where the large trader activity is taking place.

When high volume appears, we must first ask ourselves why it has appeared

precisely at that point.

Why is the big money interested in that zone?

And secondly, we need to assess how the price reacts subsequently, as this will

often clear up all our doubts about what to expect next.