1 00:00:00,270 --> 00:00:02,330 Trading at internal false breakouts. 2 00:00:02,650 --> 00:00:07,150 By internal false breakouts, we mean those that take place within the limits 3 00:00:07,150 --> 00:00:11,170 the range, not the spring or upthrust that occur at the very limits of the 4 00:00:11,170 --> 00:00:15,530 structure. When these types of false breakouts occur within the range, we 5 00:00:15,530 --> 00:00:18,050 generally call them a minor spring or upthrust. 6 00:00:19,250 --> 00:00:23,910 As I have already commented on many occasions, I believe the false breakout 7 00:00:23,910 --> 00:00:27,790 the most important event that takes place in the market and that it 8 00:00:27,790 --> 00:00:29,310 trading opportunity in itself. 9 00:00:30,040 --> 00:00:34,760 You can go to any chart for any asset and in any time frame and you will see 10 00:00:34,760 --> 00:00:38,960 that almost every impulse movement is generated by a prior false breakout. 11 00:00:39,360 --> 00:00:43,520 This is why I always recommend you focus on looking for this type of action. 12 00:00:44,200 --> 00:00:48,420 In this part of the course, we are going to look in more detail at internal 13 00:00:48,420 --> 00:00:52,400 false breakouts, the minor springs and upthrusts that occur during the 14 00:00:52,400 --> 00:00:54,900 development of structures from two points of view. 15 00:00:55,380 --> 00:00:59,750 First, We will see what conditions we should expect when executing trades at 16 00:00:59,750 --> 00:01:02,170 these points to ensure a certain chance of success. 17 00:01:02,570 --> 00:01:07,710 And secondly, we will see how to trade the internal false shakeout that acts as 18 00:01:07,710 --> 00:01:08,990 the Phase C test event. 19 00:01:09,710 --> 00:01:13,730 Let's look at the first case, our trading approach to minor false 20 00:01:13,730 --> 00:01:17,750 during the development of the range, provided we have not potentially seen 21 00:01:17,750 --> 00:01:19,290 genuine spring or upthrust. 22 00:01:19,990 --> 00:01:24,250 As we have previously commented, in a sideways environment where the market is 23 00:01:24,250 --> 00:01:29,100 zigzagging up and down, We are in a neutral context which allows us to trade 24 00:01:29,100 --> 00:01:33,540 the limits, looking for bearish false breakouts at the lows and bullish ones 25 00:01:33,540 --> 00:01:37,560 the highs in the expectation that the price will reverse and go back into the 26 00:01:37,560 --> 00:01:42,560 range. It is a riskier type of trading as the structure is still developing, 27 00:01:42,560 --> 00:01:46,500 cause is being built, and the balance of the market could be tipped in one 28 00:01:46,500 --> 00:01:48,280 direction or the other at any time. 29 00:01:48,660 --> 00:01:53,080 Our advantage is that we want to trade the most decisive behavior of the 30 00:01:53,220 --> 00:01:54,220 the false breakout. 31 00:01:54,840 --> 00:01:58,800 So my recommendation here is to wait for the market to confirm that the context 32 00:01:58,800 --> 00:01:59,980 really is neutral. 33 00:02:00,280 --> 00:02:01,320 How do we do this? 34 00:02:01,740 --> 00:02:05,340 We wait for the appearance of the first change of character that causes the 35 00:02:05,340 --> 00:02:08,039 market to move from a trend state to a sideways one. 36 00:02:08,759 --> 00:02:13,300 In terms of the Wyckoff method, we see this with the appearance of Phase A, 37 00:02:13,400 --> 00:02:15,120 stopping the previous trend. 38 00:02:15,580 --> 00:02:20,400 This change of context will be the sign that we must wait for before considering 39 00:02:20,400 --> 00:02:25,040 the option of trading at the range limits buying at the bottom and selling 40 00:02:25,040 --> 00:02:25,859 the top. 41 00:02:25,860 --> 00:02:28,480 Wherein lies the logic behind this type of trading? 42 00:02:28,860 --> 00:02:33,140 We have already discussed it on other occasions, but it is so important that 43 00:02:33,140 --> 00:02:34,140 is worth repeating. 44 00:02:34,280 --> 00:02:39,300 At this very incipient moment of the structure, the valuations of the agents 45 00:02:39,300 --> 00:02:42,540 will be very similar and this will generate the price shift. 46 00:02:43,160 --> 00:02:47,760 Value and price will converge, generating opportunities at the limits 47 00:02:47,760 --> 00:02:51,820 range, as the levels are seen as too expensive or too cheap. 48 00:02:52,280 --> 00:02:56,300 This will lead to the appearance of traders interested in pushing the price 49 00:02:56,300 --> 00:03:00,880 the opposite direction, offering an edge to the trader who knows to identify it. 50 00:03:01,120 --> 00:03:05,820 At that point, we can draw supply and demand zones at the upper and lower 51 00:03:05,960 --> 00:03:09,980 and that is where we will expect the price to develop some type of false 52 00:03:09,980 --> 00:03:12,600 breakout, either complete or minor. 53 00:03:12,960 --> 00:03:17,100 The combination of being in the trading zone where we expect an imbalance in 54 00:03:17,100 --> 00:03:21,920 supply and demand to occur and the emergence of a false breakout that takes 55 00:03:21,920 --> 00:03:25,240 price to some relevant previous high or low is key here. 56 00:03:25,840 --> 00:03:30,720 We already know that we can use the rationale behind pivots to identify 57 00:03:30,720 --> 00:03:35,120 turning points, although it is always better if this is something visual and 58 00:03:35,120 --> 00:03:39,240 forced, since this will mean that it is very evident that we are seeing a clear 59 00:03:39,240 --> 00:03:40,240 reversal in the market. 60 00:03:40,800 --> 00:03:44,740 In this example, we see different opportunities at both edges. 61 00:03:45,020 --> 00:03:46,280 Classic range trading. 62 00:03:46,720 --> 00:03:50,320 where we look for bearish false breakouts on the bottom and bullish 63 00:03:50,320 --> 00:03:54,980 breakouts in the upper limits, waiting for a return to the fair value or price. 64 00:03:55,380 --> 00:04:00,320 How long can we implement this trading at the edges? We already know, until the 65 00:04:00,320 --> 00:04:03,940 definitive false breakout appears that is likely to generate the start of the 66 00:04:03,940 --> 00:04:04,980 imbalance of the structure. 67 00:04:05,620 --> 00:04:09,800 At this point, with the development of the second change of character, the 68 00:04:09,800 --> 00:04:12,760 roadmap only allows us to look for trades in this direction. 69 00:04:13,320 --> 00:04:18,459 For this example, we would only look for bullish false breakouts or upthrusts 70 00:04:18,459 --> 00:04:21,579 and discard any bullish opportunity that might present itself. 71 00:04:22,420 --> 00:04:27,300 Therefore, the conclusions are, firstly, the appearance of the false breakout to 72 00:04:27,300 --> 00:04:32,640 a previous high or low in the supply and demand zone, and secondly, to be clear 73 00:04:32,640 --> 00:04:36,640 that we are only going to look for potential opportunities from the end of 74 00:04:36,640 --> 00:04:41,360 A, which stops the trend up until the appearance of the Phase C test event. 75 00:04:41,800 --> 00:04:45,720 Now we are going to address the second concept regarding internal false 76 00:04:45,720 --> 00:04:49,980 breakouts, which is how to trade these minor false breakouts when they appear 77 00:04:49,980 --> 00:04:51,100 the phase C test event. 78 00:04:51,400 --> 00:04:55,740 That is, when they appear and generate the final imbalance of the structure and 79 00:04:55,740 --> 00:04:57,080 start the effect of the cause. 80 00:04:57,880 --> 00:05:02,140 Since you are Wyckoff traders with some experience, you already know that I am 81 00:05:02,140 --> 00:05:05,900 referring to the general pattern number 2 of the methodology, where the 82 00:05:05,900 --> 00:05:08,500 structure appears without a spring or upthrust. 83 00:05:08,970 --> 00:05:13,370 This chart shows a clear example of accumulation structure number 2 without 84 00:05:13,370 --> 00:05:14,370 total false breakout. 85 00:05:14,830 --> 00:05:19,490 We can see how a minor spring takes place, hitting a previous relevant low 86 00:05:19,490 --> 00:05:24,110 within the range, but it does not reach the low of the structure, and that from 87 00:05:24,110 --> 00:05:27,850 there the market reverses upwards and continues out of the range. 88 00:05:28,710 --> 00:05:33,410 In these patterns, where the total false breakout doesn't appear at the edges of 89 00:05:33,410 --> 00:05:37,340 the structure, How can we know that the minor false breakout that we are 90 00:05:37,340 --> 00:05:42,040 observing is really the LPS in Phase C that will generate the subsequent 91 00:05:42,040 --> 00:05:43,040 imbalance? 92 00:05:43,480 --> 00:05:45,040 Obviously, we can't for sure. 93 00:05:45,260 --> 00:05:47,500 It is impossible to know in real time. 94 00:05:47,860 --> 00:05:52,300 There may be some sign that suggests that it could be. For example, if the 95 00:05:52,300 --> 00:05:56,720 structure is already quite mature and has already consumed a lot of time. But 96 00:05:56,720 --> 00:06:01,600 even so, we will always doubt whether we are really dealing with the LPS or if, 97 00:06:01,740 --> 00:06:05,700 on the contrary, the real spring or up thrust is going to happen subsequently. 98 00:06:06,720 --> 00:06:11,260 This is the typical example that doesn't offer us any opportunity and it can be 99 00:06:11,260 --> 00:06:14,760 somewhat frustrating, especially if you have been trying to find an opportunity 100 00:06:14,760 --> 00:06:16,060 throughout the whole session. 101 00:06:16,600 --> 00:06:18,600 You need to be very aware of this. 102 00:06:18,900 --> 00:06:22,700 There will be days when you will be in front of the screen for hours without 103 00:06:22,700 --> 00:06:24,180 identifying any opportunity. 104 00:06:24,740 --> 00:06:27,900 This is normal and you should accept it as par for the course. 105 00:06:28,430 --> 00:06:32,570 Let's now analyze the following situation, similar to the previous 106 00:06:33,190 --> 00:06:36,450 Suppose we are in the middle of seeing a potential accumulation structure 107 00:06:36,450 --> 00:06:40,730 develop, and the price behaves in a way that suggests we could be looking at a 108 00:06:40,730 --> 00:06:44,910 minor spring based on the LPS, which could lead to the subsequent bullish 109 00:06:44,910 --> 00:06:45,910 imbalance. 110 00:06:46,230 --> 00:06:48,430 Note that there is a double false breakout. 111 00:06:48,690 --> 00:06:53,250 The price has reached two liquidity zones established in those two pivots 112 00:06:53,250 --> 00:06:57,760 the range, so if possible, This confers even greater strength to the potential 113 00:06:57,760 --> 00:06:58,760 scenario. 114 00:06:58,920 --> 00:07:03,460 And to add even greater strength, the last bullish candlestick certainly 115 00:07:03,460 --> 00:07:04,480 a major bullish intent. 116 00:07:04,900 --> 00:07:07,500 It is what we call an SOS bar. 117 00:07:07,840 --> 00:07:08,840 What do we do? 118 00:07:09,060 --> 00:07:10,060 Do we buy? 119 00:07:10,740 --> 00:07:14,960 Well, what eventually happened on this occasion was that the market plunged 120 00:07:14,960 --> 00:07:19,080 below the total lows of the structure before generating from there the effect 121 00:07:19,080 --> 00:07:23,120 imbalance and launching the price upwards, confirming the accumulation 122 00:07:23,790 --> 00:07:27,470 My conclusion regarding alternative structures where the total false 123 00:07:27,470 --> 00:07:31,710 does not appear is that we will always be wondering whether the market will hit 124 00:07:31,710 --> 00:07:35,790 that low further down to reach the total edge of the structure and that, 125 00:07:35,870 --> 00:07:38,530 therefore, it would hit our stop loss if we entered. 126 00:07:39,370 --> 00:07:43,950 This is quite worrying for the Wyckoff trader, which makes me very wary of this 127 00:07:43,950 --> 00:07:44,950 type of behavior. 128 00:07:45,090 --> 00:07:49,810 For this reason, my direct recommendation on many occasions is not 129 00:07:49,810 --> 00:07:53,190 type of structure, which does not appear to have a total false breakout. 130 00:07:53,740 --> 00:07:58,240 There are always opportunities in the market, and I particularly prefer to 131 00:07:58,240 --> 00:08:00,000 risk by avoiding trading here. 132 00:08:00,600 --> 00:08:05,100 We may find ourselves before other types of situations where I believe trading 133 00:08:05,100 --> 00:08:08,400 an internal false shakeout offers a better chance of success. 134 00:08:09,060 --> 00:08:13,180 This would be the case after seeing a false breakout at the very limit of the 135 00:08:13,180 --> 00:08:16,340 range, in other words, after having seen a spring. 136 00:08:16,880 --> 00:08:20,720 Since we know that the roadmap puts us in a position to expect an upward 137 00:08:20,720 --> 00:08:24,760 movement, it would be a good time to look for some type of internal false 138 00:08:24,760 --> 00:08:27,020 breakout during the development of said movement. 139 00:08:27,380 --> 00:08:31,520 In many cases, this will not happen due to the momentum that the market is 140 00:08:31,520 --> 00:08:35,659 carrying, and it will simply quickly move all the way through the structure 141 00:08:35,659 --> 00:08:37,700 the opposite end, as in this example. 142 00:08:38,299 --> 00:08:43,100 However, on other occasions, we will observe this behavior, especially if we 143 00:08:43,100 --> 00:08:46,300 make use of multiple time frames and go down to a shorter one. 144 00:08:46,870 --> 00:08:50,910 Remember to make use of the logic behind the creation of pivots to correctly 145 00:08:50,910 --> 00:08:51,910 identify this. 146 00:08:52,410 --> 00:08:56,190 This type of entry, after having seen the spring and the sign of strength, 147 00:08:56,450 --> 00:09:00,710 offers us a high probability of success since we are entering in the direction 148 00:09:00,710 --> 00:09:02,090 of the most immediate imbalance. 149 00:09:03,490 --> 00:09:08,270 Structural Failure Before we go any further, let's address the concept that 150 00:09:08,270 --> 00:09:12,190 actually lies behind the behavior of the total false breakout pattern, the 151 00:09:12,190 --> 00:09:13,190 structural failure. 152 00:09:13,590 --> 00:09:14,730 Be very careful. 153 00:09:15,070 --> 00:09:18,710 because the fact that the market has not had enough capacity to reach the total 154 00:09:18,710 --> 00:09:22,170 lows of the structure in itself is a signal that denotes strength. 155 00:09:22,590 --> 00:09:26,610 The agents that are trading in that market have not even allowed the price 156 00:09:26,610 --> 00:09:29,830 down to those lower levels before them buying more aggressively. 157 00:09:30,330 --> 00:09:34,550 This somehow tells us that they have found those prices to be cheap enough to 158 00:09:34,550 --> 00:09:36,950 start buying without expecting lower prices. 159 00:09:37,310 --> 00:09:38,850 This is very interesting. 160 00:09:39,450 --> 00:09:43,010 From a trading approach, we would love to see a total false breakout. 161 00:09:43,450 --> 00:09:47,710 because of the implications it has and because it is very convenient for us not 162 00:09:47,710 --> 00:09:51,350 to have to think about whether that intermediate false breakout will be the 163 00:09:51,350 --> 00:09:56,110 potential phase c test event that will unbalance the structure but a structural 164 00:09:56,110 --> 00:10:01,190 failure like this also has very powerful implications as i have just mentioned 165 00:10:01,190 --> 00:10:06,810 sometimes i say that what the market manages to do is just as important as 166 00:10:06,810 --> 00:10:12,150 it fails to do and generally what the market fails to do tends to go unnoticed 167 00:10:12,150 --> 00:10:13,710 by the inexperienced trader. 168 00:10:14,270 --> 00:10:17,410 What the market manages to do is important and evident. 169 00:10:17,610 --> 00:10:19,770 This information is available to everyone. 170 00:10:20,190 --> 00:10:25,410 But what it fails to do, such as in this example, is also very important in its 171 00:10:25,410 --> 00:10:28,250 analysis and very few are able to decipher it. 172 00:10:28,530 --> 00:10:33,450 In this case, the market has not made it all the way down to visit the bottom of 173 00:10:33,450 --> 00:10:37,930 the structure, and this, by definition, is a strong signal that we should watch 174 00:10:37,930 --> 00:10:38,930 out for. 175 00:10:39,030 --> 00:10:43,910 In this example, A structural failure of strength can be observed, but it 176 00:10:43,910 --> 00:10:48,390 applies equally to distribution patterns in which the price does not develop a 177 00:10:48,390 --> 00:10:52,610 total upthrust over the highs of the structure, which would imply a 178 00:10:52,610 --> 00:10:56,030 failure of weakness by not being able to reach said highs. 179 00:10:56,490 --> 00:11:00,570 Does everything previously discussed mean, then, that we cannot take 180 00:11:00,570 --> 00:11:02,730 of the alternative pattern? Of course not. 181 00:11:02,990 --> 00:11:06,750 We probably won't be able to take advantage of that minor false breakout 182 00:11:06,750 --> 00:11:08,670 will occur at some low inside the structure. 183 00:11:09,050 --> 00:11:10,710 but this is not the only trading zone. 184 00:11:11,210 --> 00:11:14,970 If the market does eventually leave the structure, without having performed a 185 00:11:14,970 --> 00:11:18,790 false breakout at the very edge of the structure, we can still take advantage 186 00:11:18,790 --> 00:11:19,790 this situation. 187 00:11:20,270 --> 00:11:21,810 Let's look at this example. 188 00:11:22,070 --> 00:11:26,770 I purposely use examples that are difficult to recognize, whose price 189 00:11:26,770 --> 00:11:30,830 not very genuine, so that you have to force your minds to look for this type 190 00:11:30,830 --> 00:11:31,830 rare structure. 191 00:11:31,870 --> 00:11:35,370 In real trading, this is what you will often see in the market. 192 00:11:35,840 --> 00:11:39,220 I have already said several times that you should forget about looking for 193 00:11:39,220 --> 00:11:43,260 genuine structures because the behavior of the market in general is very 194 00:11:43,260 --> 00:11:47,060 erratic. Let's imagine that the price is breaking through the highs of the 195 00:11:47,060 --> 00:11:51,380 structure and that up to that point we have not yet seen a spring that has 196 00:11:51,380 --> 00:11:53,060 destroyed the lows of the structure. 197 00:11:53,400 --> 00:11:57,340 We will always have the doubt as to whether the market is really breaking 198 00:11:57,340 --> 00:12:01,580 before continuing in that direction or if it is a potential bullish false 199 00:12:01,580 --> 00:12:06,960 breakout. At that point, we must ask ourselves, what inputs do we have in 200 00:12:06,960 --> 00:12:08,360 of one side or the other? 201 00:12:08,800 --> 00:12:12,560 If we want to buy, what signals do we have in favor of the buyers? 202 00:12:13,120 --> 00:12:17,100 Looking at the chart at this point, we could already observe at least the 203 00:12:17,100 --> 00:12:18,100 following. 204 00:12:18,400 --> 00:12:22,540 Reduction in volume during range development, which we already know is a 205 00:12:22,540 --> 00:12:24,880 characteristic feature of accumulation patterns. 206 00:12:25,800 --> 00:12:30,300 Structural failure, hidden and high -quality information that signals to us 207 00:12:30,300 --> 00:12:31,740 there is underlying strength. 208 00:12:32,590 --> 00:12:36,590 The minor false breakout inside the range, which plunges through a 209 00:12:36,590 --> 00:12:38,110 intermediate liquidity zone. 210 00:12:38,690 --> 00:12:43,070 The bullish breakout with good demand candlesticks, denoting the presence and 211 00:12:43,070 --> 00:12:44,310 aggressiveness of the buyers. 212 00:12:44,630 --> 00:12:50,290 And the non -reentry into the range, evidenced by that sideways movement 213 00:12:50,290 --> 00:12:51,570 the high of the structure. 214 00:12:52,090 --> 00:12:57,170 Well, in the end, it seems that we do have enough signs to start assessing a 215 00:12:57,170 --> 00:12:58,930 possible purchase opportunity, right? 216 00:12:59,470 --> 00:13:04,840 And finally, On top of the five aforementioned signs, an entry trigger 217 00:13:04,840 --> 00:13:08,960 in the trading zone, another input that should have led us to assess the 218 00:13:08,960 --> 00:13:12,880 possibility of entering the market, since at that point there are several 219 00:13:12,880 --> 00:13:14,380 indicating a bullish scenario. 220 00:13:15,400 --> 00:13:19,900 Once out of the range, several more opportunities to re -enter appeared 221 00:13:19,900 --> 00:13:21,220 the development of the uptrend. 222 00:13:21,880 --> 00:13:26,720 As we can see, the fact that we cannot initially see a total false breakout at 223 00:13:26,720 --> 00:13:30,490 the edges of the range does not mean that we should discard the asset. 224 00:13:31,070 --> 00:13:35,630 We should keep monitoring it, because the methodology offers us more possible 225 00:13:35,630 --> 00:13:40,450 entries on top of that one. We just need to be clear about the context and what 226 00:13:40,450 --> 00:13:41,870 we expect the market to do.