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Which trading level should you
prioritize?

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Having addressed in which zones we
should observe the market to find our

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we may sometimes see that there is more
than one trading level in which to look

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for the definitive entry trigger.

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To apply this concept, we are going to
follow the same principle that we have

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been using up to now, which is to let
the market confirm which one it should

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We will suggest scenarios and it will be
the market that confirms the right one.

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If we summarize all the possible trading
opportunities, The only two levels that

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we need to consider arise from only two
different situations.

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On the one hand, we have the trading
levels that are established by the edges

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the structure, which are where we will
subsequently hope to see the Phase B and

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C false breakouts develop, as well as
the test after the breakout of the

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structure. And on the other hand, we
have the trading levels that are

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established by the generation of pivots,
where we are going to look for all the

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false breakouts, be they within the
range or outside.

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in the direction of the trend.

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Because in the vast majority of cases
structures are quite erratic,

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trading levels that can be complicated
or subjective, especially when it comes

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to identifying the edges of the
structure where we are looking for that

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and retest movement that confirms the
accumulation of distribution patterns.

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The key idea here is that there is no
level that is better or more important

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than another, that we must take into
account all the trading levels that

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and that it must be the market that
confirms which one it will follow.

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This puts us in a very comfortable
position of not having to guess which

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to use.

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We simply need to identify all the
trading levels to forecast the scenario

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let the market decide.

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In this example, we see that two trading
levels have been generated at the upper

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end of the structure, the first which is
set by the automatic rally, and the

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second established by that up thrust
action.

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When the breakout finally occurs, we
don't know which one the market will use

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leverage and to create the imbalance out
of rain, and that's why we need to take

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both into account.

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In this case, it supports itself on the
resistance generated in the AR,

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developing a good bullet reversal
pattern there, confirming the BUEC and

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offering up an opportunity to buy.

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Subsequently, the market made some use
of the trading level created by the

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upthrust type action.

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developing a minor false breakout on it
before continuing the trend movement.

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This situation sets up a high -quality
opportunity as we have a confluence of

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levels. First, the old resistance of the
AR that would now act as the support,

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and in addition, the generation of a
pivot that has allowed a false breakout

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the lows, also a good bullish SOS bar
candlestick that would act as the

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definitive entry trigger.

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Since the subject has come up, Let me
explain why I haven't used the broken

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support and resistance levels as trading
levels when we're in favor of the

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trend, although we do use it when we
find ourselves in a potential break and

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retest situation.

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As we know, those levels are useful
because they identify turning points,

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imbalances between supply and demand.

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They are areas where there has been a
price reversal and, based on the

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principles of technical analysis, we
would expect it to act in the same way

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the future, in other words, by
generating another imbalance.

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One of the drawbacks of this concept is
that the trend will be determined by the

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momentum it carries.

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This means that which on some occasions
it will behave normally, but on others

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it will be fast and the correction will
never reach the previous edge or it will

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be slow and the corrections will exceed
the previous edge.

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This leads to a certain ambiguity in its
application, which translates into

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uncertainty when trading.

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But the main problem that I have
identified with experience is that the

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can move very erratically at times, and
it's really very difficult to find this

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kind of genuine behavior in which the
price respects the old broken resistance

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and uses it as a support, allowing us to
look for the entry trigger.

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It is very difficult to see these kinds
of examples.

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My point of view is that this tool is
more useful for assessing the market

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sentiment to see if it is gaining or
losing momentum.

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as an added input to evaluate the
anatomy of the trend, but that's it.

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useful to assess potential
opportunities.

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Going back to how we should prioritize
trading levels, here we have another

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example. In this case, we can identify
up to four potential trading levels that

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we should take into account.

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But if you look closely, numbers 1 and 2
are too close together, as are 3 and 4.

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Well, in this case, I would simply take
for granted that the distance between

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these levels is very short.

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It is always important to apply logic
and common sense so as not to force the

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analysis too much.

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It is not necessary to calibrate
everything exactly to the millimeter,

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the market is not like that. The market
is flexible.

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By this, I mean that level 1 and 2 can
be taken to represent the same thing,

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that 3 and 4 can also be considered as
1.

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there is not a significant enough
difference to treat them completely

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independently. We could even accept that
the whole distance between the levels

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as a single zone.

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This wouldn't be a bad idea at all. In
the end, in such short distances, going

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little higher or lower does not
substantially change anything.

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In essence, the strength of the concept
is represented by that zone, on which

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the market has rotated multiple times
when interacting with it previously.

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And that is why we hope that somewhere
in the space covered by those levels,

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that reversal will appear once more.

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Other than that, we see two other
potentially high -quality trades

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the confluence of trading zone plus
false breakout event.

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In this other example, the market again
visits the low and initially develops a

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good reversal of candlesticks that we
could and should have used as an entry

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trigger.

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Subsequently, the market returns to the
same area and develops a small shakeout

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at that low before starting the actual
imbalance outside the range.

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One important aspect to consider is that
it is not very common after a breakout

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for markets to develop a perfect test at
the level of the broken structure

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before starting a trend movement from
that point.

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On many occasions, the price moves
sideways, outside the range, for a while

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before continuing, and on some
occasions, the price develops further

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breakouts at some previous pivot point,
as in the example.

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This is why, if the price initially
appears to be developing a perfect

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test, as is the case in this example,
and if the entry trigger appears, then

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simply must enter the market, though we
need to be aware that the imbalance may

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not be generated immediately and the
market is likely to build some

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before starting a trend movement.

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We'll get into this in more depth when
we talk about position management.

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The only thing that we must be clear
about in this potential break and retest

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scenario is that we are not going to
enter with limit orders. And since we

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want to enter the market early under any
circumstances, we will wait for the

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trigger to appear on the level of
imbalance that the market chooses.

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Our task as analysts is to consider all
possible scenarios.

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After that...

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Our task as traders is to act once the
entry trigger appears.

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When it comes to the creation of pivots
on which to look for the false breakout,

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objective logic suggests that the more
candlesticks that have been used to

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generate said pivot, the greater the
strength.

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However, I personally recommend having
all of them identified, since all pivots

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create liquidity zones, zones of
potential imbalance between buyers and

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and therefore they can all provide us
with trading opportunities.

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Ultimately, it will be the price that
confirms which level is more important

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that particular market situation.

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We must not get ahead of ourselves.

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Our interpretation of the market is
reactive and herein lies the importance

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the appearance of our entry trigger as
the last indicator of the intention of

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the major players to move in that
direction.

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We simply have to analyze the action of
the market at those levels that we have

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identified and look for the entry
trigger on them.

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the price could reach our first trading
level and not develop the trigger,

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visiting instead the second trading
level lower down, where it might or

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not develop the trigger.

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In this example, many of the pivots I
have marked were left unvisited.

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But that doesn't matter. Our task is to
ensure we have them all identified if we

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are looking for an entry.

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Many of them did not offer us an entry
trigger. Others did, but the trade would

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have resulted in a loss.

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while some others would have resulted in
profits.

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This is the nature of the business.

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Opportunities don't always appear, and
when they do, some will be winners and

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others losers.

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And here we have another example, this
time showing the search for pivots at

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highs on which to wait for a bullet
-false breakout or upthrust.

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Again, there will always be some pivots
that offer no entry opportunity since,

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once the price is there, it does not
develop the entry trigger, and others

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that... also depending on the type of
management, can result in a break -even,

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loss, or profit.

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An important point to remember is that
we may not always be able to make a

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profit from a trade because we have
placed the stop loss too close or

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have not identified the entry trigger,
but with the context and the roadmap

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we have already assimilated, it would be
very difficult for us to be positioned

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on the wrong side of the market.

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With everything we've seen over the
course, we shouldn't be looking to buy

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bearish context like this.

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so we shouldn't be focused on looking
for bearish pivots on which to expect a

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potential spring.

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Knowing how to identify the correct side
of the market is something that gives

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us a major edge over the standard
trader.

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I'm going to refer back to pivots since
these are an essential element in our

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trading approach.

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As we have seen in the previous
examples, there are trading levels that

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not have been taken into account
depending on the configuration that we

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generate the pivots.

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Remember that the traditional
configuration recommends that we use two

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candlesticks on the left and right of
the edge.

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But this, like everything, is not
universal.

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As analysts, we have the ability to
decide which configuration offers us the

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greatest confidence when trading.

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You may decide that instead of two, you
will use three or four candlesticks to

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the left and right, and this is
perfectly valid.

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The greater the number of candlesticks
with which you configure your pivot, the

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greater strength they will have since
you can expect more liquidity at their

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edges. The drawback is that
configuration is less likely to appear

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and you will therefore have fewer
opportunities for trading.

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You might find it interesting to use one
type of configuration or another,

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depending on the time frame you are
using.

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In very short time frames, the number of
pivots that will be created if you

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configure them with two candlesticks to
the left and right will be very high.

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This might be a good context in which to
increase the number.

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Since each market is a world of its own,
I recommend that you analyze the

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history of the market to find out what
configuration has worked well in the

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past. You can do this in different ways
depending on how dedicated you are,

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visually, through a manual analysis, or
even using an automatic tool.

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Conversely, if we use a large number of
candlesticks in our configuration of

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pivots for higher timeframes, we may
never find an opportunity to trade.

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The recommendation here is that you
lower that figure.

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In this context, on daily or weekly
charts, a traditional configuration

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two or three pivots is usually a wise
choice.