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How to predict sound scenarios.

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

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

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

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

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

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

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management techniques which we will look
at later on.

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

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

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never anything beyond that.

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

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

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know what is actually being built.

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

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

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

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absolutely no idea what they are doing.

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It's not Wyckoff.

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A trader who really understands the
fundamentals of the methodology would

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predict such a scenario.

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

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

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

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trying to predict a scenario of this
type.

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

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

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price is going to break the structure
below.

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

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develop a new bearish movement
confirming the entire structure as a

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

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

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course on the adaptive market hypothesis
in which different types of

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

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

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

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foundation makes no sense whatsoever.

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

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

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

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

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

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and cause the market sentiment to shift.

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

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

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the structure to interact with the
liquidity zone.

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No one can know what will happen there.

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

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out of the structure?

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We can't possibly know.

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

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reactive approach.

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

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happening in the market.

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

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

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downwards. Based on what?

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

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application of the Wyckoff method.

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And in this position, we face the same
problem.

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

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lead to the downtrend?

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

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

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

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

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to continue pushing downwards.

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Why would this be the only possible
scenario?

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

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

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

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has managed to break the structure at
the bottom.

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

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

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signs continue to favor our scenario.

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

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where they had absolutely no basis for
doing so.

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

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

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would have been the right one.

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

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like this.

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

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

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

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

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

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range. Come on, this is complete
nonsense.

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

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

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

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

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certain movement developing
subsequently.

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

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and so on, without ever getting ahead of
ourselves.

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

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

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

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

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better.

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

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

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for the break and retest that will give
us confirmation.

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

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

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

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assurances.

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

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

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

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

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

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

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capacity might intervene at any moment.