AMD - Potential Breakout Ahead
In this post, I'll explain why AMD looks like it is in a classic Wyckoff accumulation phase and why we might see an upside breakout, despite September being a typically bearish month. I will break down the subphases of accumulation based on the Wyckoff method and analyze how volume supports this bullish structure. To support this idea, AMD has had a recent positive earnings, accompanied with a plethora of bullish news.
Wyckoff Accumulation Subphases and Volume Analysis
Preliminary Support (PS): This is where early buying interest stepped in, with volume gradually increasing, lime green vector candles show that larger players are starting to accumulate shares. Red vector candles at this point reflect a test of supply as the price created a resistance, with market makers absorbing sell orders to set the stage for the next phase.
Selling Climax (SCLMX): The SC marked the lowest point, where panic selling peaked, accompanied by a large red vector candle. This candle represents significant selling pressure, but market makers and institutional players were stepping in to absorb it, creating the bottom of the accumulation range.
Automatic Rally (AR): Following the SCLMX, the price rebounded into an automatic rally. This is a natural reaction to the exhaustion of selling pressure, with lower volume, as the market adjusts to reduced selling intensity. No aggressive buying yet, but a signal that the market is consolidating.
Secondary Tests (ST): The ST retests the support level established at the SC. The second ST broke below support, accompanied by another large red vector candle. This indicates that the market makers were again absorbing the remaining supply, setting up for the next phase. The high volume reflects this absorption, confirming the presence of significant players preparing for the bullish move.
Period Between the Second ST and the Sign of Strength (SOS):
After the second ST, the price moved back toward the resistance formed near the PS level. Red vector candles appeared here, signaling market makers were once again testing supply at higher levels. The price tested resistance, absorbing any selling pressure, and allowing market makers to accumulate more shares without allowing the price to break out prematurely. This period is a crucial transition in accumulation, where market makers want to confirm that no large selling pressure remains before moving toward the Sign of Strength (SOS). By absorbing this supply at higher prices, market makers ensure that there’s minimal resistance when they push the price higher during the SOS phase.
Sign of Strength : The SOS phase represents the first significant bullish movement, where the price rallies sharply on large green vector candles. This shows that market makers have started marking up the price after absorbing most of the supply. Volume increases during this move, confirming strong buying demand as the price tests the upper range of resistance.
The green vector candles are a sign that market makers are starting to push the price higher, preparing for the final shakeout.
Spring: The spring comes after the SOS, where the price drops below the established support for a final shakeout. The goal here is to trap weak hands, triggering stop losses and forcing retail traders to exit their positions. This move down is marked by red vector candles, indicating significant selling pressure, but again, it is being absorbed by larger players.
High volume during the spring signals that market makers are buying into the drop, absorbing the last bit of supply before the upward move.
Test: After the spring, the test occurs at lower volume, confirming that no significant selling pressure remains. Smaller green and red candles appear during the test, suggesting that the market is now balanced and ready to move upward.
Wyckoff Accumulation Subphases and Volume Analysis
Preliminary Support (PS): This is where early buying interest stepped in, with volume gradually increasing, lime green vector candles show that larger players are starting to accumulate shares. Red vector candles at this point reflect a test of supply as the price created a resistance, with market makers absorbing sell orders to set the stage for the next phase.
Selling Climax (SCLMX): The SC marked the lowest point, where panic selling peaked, accompanied by a large red vector candle. This candle represents significant selling pressure, but market makers and institutional players were stepping in to absorb it, creating the bottom of the accumulation range.
Automatic Rally (AR): Following the SCLMX, the price rebounded into an automatic rally. This is a natural reaction to the exhaustion of selling pressure, with lower volume, as the market adjusts to reduced selling intensity. No aggressive buying yet, but a signal that the market is consolidating.
Secondary Tests (ST): The ST retests the support level established at the SC. The second ST broke below support, accompanied by another large red vector candle. This indicates that the market makers were again absorbing the remaining supply, setting up for the next phase. The high volume reflects this absorption, confirming the presence of significant players preparing for the bullish move.
Period Between the Second ST and the Sign of Strength (SOS):
After the second ST, the price moved back toward the resistance formed near the PS level. Red vector candles appeared here, signaling market makers were once again testing supply at higher levels. The price tested resistance, absorbing any selling pressure, and allowing market makers to accumulate more shares without allowing the price to break out prematurely. This period is a crucial transition in accumulation, where market makers want to confirm that no large selling pressure remains before moving toward the Sign of Strength (SOS). By absorbing this supply at higher prices, market makers ensure that there’s minimal resistance when they push the price higher during the SOS phase.
Sign of Strength : The SOS phase represents the first significant bullish movement, where the price rallies sharply on large green vector candles. This shows that market makers have started marking up the price after absorbing most of the supply. Volume increases during this move, confirming strong buying demand as the price tests the upper range of resistance.
The green vector candles are a sign that market makers are starting to push the price higher, preparing for the final shakeout.
Spring: The spring comes after the SOS, where the price drops below the established support for a final shakeout. The goal here is to trap weak hands, triggering stop losses and forcing retail traders to exit their positions. This move down is marked by red vector candles, indicating significant selling pressure, but again, it is being absorbed by larger players.
High volume during the spring signals that market makers are buying into the drop, absorbing the last bit of supply before the upward move.
Test: After the spring, the test occurs at lower volume, confirming that no significant selling pressure remains. Smaller green and red candles appear during the test, suggesting that the market is now balanced and ready to move upward.
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