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Scenario Management This part of the
module will explain how to manage

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situations in which the observed
behavior initially suggests we should

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the original scenario and only activate
it again if we see that the market

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resolves this tricky situation.

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In other words, situations in which the
context and the roadmap are called into

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question due to a specific action.

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Before specifically addressing the first
of these situations, it is important to

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understand the anatomy of these
movements that take the price into the

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zone, since the feeling we get from
these movements will largely determine

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type of scenario management we should
carry out.

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Generally speaking, when we look for our
trigger entry to appear in a trading

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zone, we are looking for the best
conditions that might favor a market

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at that point.

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Regardless of the trading zone and the
strategy to be used, we enter the market

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in the hope that a reversal will be
generated at the point that causes a

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of direction.

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Therefore, the price reaching the
trading zone with a certain momentum

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movement that appears to be an impulse
is not the same as the price reaching

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trading zone with a loss of momentum
with what appears to be a correction.

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The why is simple. If nothing else
changes, what is most likely to follow

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impulse? Well, a correction, so that the
price can subsequently develop a new

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impulse in that direction.

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And what is most likely to follow a
correction? Well, an impulse in the

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direction.

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This is why it is crucial that we
analyze the anatomy of the movements

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the price into the trading zone, because
the feasibility of the scenario will

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depend on their nature.

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If the movement to reach the level is
corrective in nature, then it will

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activate the scenario and we can look
for the entry trigger.

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If, on the other hand, the movement is
impulsive in nature, we should discard

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the scenario until we see some loss of
momentum in that movement.

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Let's look at an example of a trading
situation in which this problem will

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generally appear.

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Looking for the test after a breakout.

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As we have already said, the fact that
the market is developing a very genuine

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structure does not mean that our
scenario is confirmed 100 % of the time.

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It is highly probable that this is the
case, but it will not always be so.

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If we see a strong bearish price
reaction after the impulse upwards, Be

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careful because even if it has traveled
a long distance, the market could still

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return to equilibrium again.

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The situation would be especially tricky
if we also see high volume at the high

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point of the bullish movement, as we saw
previously.

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For whatever reason, the buyers have
exited and the sellers have aggressively

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entered. The lack of interest of the
former and the initiative of the latter

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generates an impulse downwards that
denotes a lot of momentum.

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Right at that point, The bullish
continuation scenario supported by the

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of the accumulation pattern should be
called into question, since we might now

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be facing a potential upthrust that
would completely change the market

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sentiment. If we are hoping to see
higher prices, we don't want to see a

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price action that shows a lot of intent.

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Seeing this, we should dismiss the
bullish scenario and only reactivate it

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some type of behavior is observed to
indicate the bearish momentum has

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or disappeared.

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A very good example of this would be the
appearance of a fast reversal pattern

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in two or three movements, or any type
of extended consolidation, or even one

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the methodology's complete patterns.

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Going back to the example, something
like this is what we should expect at

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before reassessing the bullish
continuation scenario at the test after

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breakout. We already know the patterns
that are normally generated by a

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in the market.

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we must wait for the appearance of at
least a fast two -movement pattern to

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confirm the loss of momentum.

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The key when implementing this type of
management is seeing that this downward

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movement is sharp, as we already know.
This must be very visual if we are to

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confirm it. A V -shape reversal that is
a mirror image of the previous impulse

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with practically the same speed.

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Let's now address another problem that
we might come across.

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When the price reaches the trading zone
with the structure against us, What do I

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mean by this? Well, if a minor
distribution structure appears just

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we are going to look for the entry
trigger when predicting a bullish

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how do we handle this?

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The worst possible scenario for us
regarding the nature of the movement

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takes the price to the trading level is
that a distribution pattern has

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developed at its origin, which would be
the cause of a subsequent downward

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movement that would visit said level.

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In this context, we would observe how
this bearish movement is being supported

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by a significant cause that has even
managed to generate a complete

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A structure that would suggest there is
significant interest from the

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participants and would represent a
certain amount of bearish control in the

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context of the market, at least in the
short term.

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A behavior that would definitely suggest
that the imbalance is downwards and

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that the most likely result is a bearish
continuation at that point.

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Going back to the same trading situation
as in the previous example, We find

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ourselves in a bullish breakout
situation, having just seen a potential

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accumulation pattern, and just above the
high of the bullish movement, the

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market leaves a minor distribution
structure, which acts as a cause that

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generates the subsequent bearish effect.

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Seeing this is initially a bit scary,
really. But what does the context and

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roadmap tell us? While the price does
not effectively re -enter the range, the

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context continues to indicate that the
structure is potentially an

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In addition, the behavior that we have
just seen according to the roadmap is

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perfectly valid since, if everything
goes well, it would be the bearish

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that develops the test after the bullish
breakout.

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In other words, the context and the
roadmap continue to be in our favor, at

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least initially.

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Nevertheless, the distribution pattern
is so evident that it should at least

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make us reconsider the scenario.

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First, we could analyze the composition
of said distribution structure to draw

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some objective conclusions.

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And second, we need to see how the price
reacts when interacting with the

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trading zone.

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What does the volume tell us?

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Well, if we analyze both movements, we
can see that the bullish momentum is

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accompanied by an increase in volume,
and that the bearish one actually shows

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pattern of decreasing volume.

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This would denote a certain harmony
between the price action and the volume.

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although it is true that, as previously
mentioned, volume analysis involves a

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somewhat subjective interpretation, it
is ultimately a sign that we can take

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into account and that can help us to
better understand what is happening.

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Meanwhile, and even more importantly,
what about the definitive sign that

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confirms whether the breakout is real or
false?

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The market might develop a minor
distribution at the end of a breakout

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but if the larger structure is
maintained, without the price re

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range, the context would continue to
suggest a show of strength since,

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regardless of what happens after the
breakout, The price's inability to re

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-enter the range is the definitive sign
that the development of the bullish

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roadmap will most likely continue.

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The main problem is, how do we enter the
market in that particular action?

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We have a potential larger accumulation
scheme, suggesting a certain directional

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bias in the general market context, and
at the same time we have a smaller

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distribution pattern that suggests there
is a certain amount of bearish control

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in the shorter term.

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The problem is that the minor
distribution pattern has already been

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since it has already had the effect of
the downward movement, but the larger

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accumulation is still only a potential
pattern based on the level of

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seen on the chart.

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We are going to continue with the
hypothesis that as long as the re -entry

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the range does not occur, the context is
favorable for going long.

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From this point onwards, as we can see,
the bearish movement continues with a

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lot of momentum.

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So the first thing we are going to do is
apply the previous concept and wait for

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the appearance of some type of
consolidation that generates the loss of

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momentum.

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As always, in terms of our trading
approach, we have various options for a

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situation like this depending on our
profile as traders.

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From entering the market as if it were
any other structure, without taking into

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account all this information, all the
way through to discarding the trade and

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staying out of the market for now.

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The more aggressive trader should wait
at least for the loss of bearish

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with some type of pattern before
entering.

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The main premise is that as long as the
price doesn't re -enter the range, the

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context remains in our favor.

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On the other hand, the more conservative
trader might consider entering the

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market once the price re -enters the
minor distribution range.

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We know that this structure has
generated interest.

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There is participation from agents.

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and, to a certain extent, it represents
bearish control of the market in the

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very short term.

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We want to enter in favor of the
potential accumulation that we have

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without facing that bearish control of
the minor distribution that we have

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too soon.

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The solution would be to wait for said
control to break, and an initial sign of

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this break is if the price manages to re
-enter the structure again.

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From that moment, we will have greater
confidence in the scenario.

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and we can start looking for our entry
trigger in some kind of quick test or

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even a new false breakout in favor of
the bullish bias.

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In these types of breakout contexts, we
would hope that a large amount of volume

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is not generated in this action,
supporting the subsequent downward

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that will visit the trading level of the
broken structure.

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If we want to treat a movement as a
correction instead of an impulse, we

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expect to see low volume at its origin,
denoting a lack of institutional

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participation in said movement.

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Also, ideally, we want the movement that
leads to the test to be a correction,

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evidenced by candlesticks with little
distance between them and low volume.

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And if in the end the market develops a
fast pattern as well, so much the

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better.