[ETHUSDT] Falling Wedge, Possible Distribution, Wyckoff Analysis
Updated
Looks as if a falling wedge is forming to test upper resistance level. I believe this could be a distribution pattern playing out, however I will be taking precautions around $2222 as this is has been an area of high volatility and bullish price action in the past.
Volume, alongside price action, is a critical component in analyzing the market through the lens of the Wyckoff method. It helps to provide clues about the presence of smart money (large professional traders and institutions) and retail traders (individual or less-informed traders) during each subphase of distribution. Here’s how volume can be interpreted in each subphase along with the behavior of smart money and retail traders:
Preliminary Supply (PSY): Volume begins to increase as smart money starts to take profits and sell their positions to retail traders who are entering the market due to the uptrend's attraction. This is often the first warning sign of distribution.
Buying Climax (BCLMX): Volume spikes to very high levels as retail traders, driven by greed and fear of missing out, buy heavily into the market. Smart money takes advantage of this liquidity to sell large amounts of their holdings.
Automatic Reaction (AR): After the buying climax, volume remains high as smart money continues to distribute their holdings. The price drops sharply, indicating that the supply has overcome the demand.
Secondary Test (ST): Volume typically diminishes on the rallies that follow the AR, suggesting a lack of new demand. Retail traders might interpret this as a buying opportunity, while smart money is likely to sell into any strength.
Sign of Weakness (SOW): As the price breaks below previous support levels, volume increases again, indicating that substantial selling is taking place. Retail traders may start to panic and sell, while smart money is actively distributing their remaining positions.
Upthrust (UT): Volume can be tricky here; it may not be as high as on the BCLMX because some retail traders are becoming wary. However, there’s often enough volume to suggest that there is still some buying happening, which smart money uses to sell into.
Upthrust After Distribution (UTAD): The volume on a UTAD is usually lower than on the initial BCLMX, showing less participation from the public. This lack of demand at higher price levels is a sign that the market is weak. Smart money might execute final sell orders here, capitalizing on the last bit of buying enthusiasm from retail traders.
Last Point of Supply (LPSY): Volume is significantly lower, indicating that the public interest is waning and that supply is still present. Smart money has largely exited their positions, and the market is ripe for a downtrend.
In the context of smart money versus retail traders:
Smart Money: They have the resources and information to initiate and sustain market trends. They sell when they believe the market has reached its peak and before the trend reverses. Their selling is what creates the distribution phase, and they aim to sell their positions to retail traders without causing a sharp price decline that might cut into their profits.
Retail Traders: Typically less informed and often influenced by emotions, retail traders tend to buy during the late stages of an uptrend, often entering the market during the BCLMX or even later. They are usually the ones holding the bag when the trend reverses because they buy into the market when smart money is selling.
Recognizing these volume patterns and understanding the interplay between smart money and retail traders can help in identifying the distribution phase's subphases and preparing for a potential trend reversal.
Volume, alongside price action, is a critical component in analyzing the market through the lens of the Wyckoff method. It helps to provide clues about the presence of smart money (large professional traders and institutions) and retail traders (individual or less-informed traders) during each subphase of distribution. Here’s how volume can be interpreted in each subphase along with the behavior of smart money and retail traders:
Preliminary Supply (PSY): Volume begins to increase as smart money starts to take profits and sell their positions to retail traders who are entering the market due to the uptrend's attraction. This is often the first warning sign of distribution.
Buying Climax (BCLMX): Volume spikes to very high levels as retail traders, driven by greed and fear of missing out, buy heavily into the market. Smart money takes advantage of this liquidity to sell large amounts of their holdings.
Automatic Reaction (AR): After the buying climax, volume remains high as smart money continues to distribute their holdings. The price drops sharply, indicating that the supply has overcome the demand.
Secondary Test (ST): Volume typically diminishes on the rallies that follow the AR, suggesting a lack of new demand. Retail traders might interpret this as a buying opportunity, while smart money is likely to sell into any strength.
Sign of Weakness (SOW): As the price breaks below previous support levels, volume increases again, indicating that substantial selling is taking place. Retail traders may start to panic and sell, while smart money is actively distributing their remaining positions.
Upthrust (UT): Volume can be tricky here; it may not be as high as on the BCLMX because some retail traders are becoming wary. However, there’s often enough volume to suggest that there is still some buying happening, which smart money uses to sell into.
Upthrust After Distribution (UTAD): The volume on a UTAD is usually lower than on the initial BCLMX, showing less participation from the public. This lack of demand at higher price levels is a sign that the market is weak. Smart money might execute final sell orders here, capitalizing on the last bit of buying enthusiasm from retail traders.
Last Point of Supply (LPSY): Volume is significantly lower, indicating that the public interest is waning and that supply is still present. Smart money has largely exited their positions, and the market is ripe for a downtrend.
In the context of smart money versus retail traders:
Smart Money: They have the resources and information to initiate and sustain market trends. They sell when they believe the market has reached its peak and before the trend reverses. Their selling is what creates the distribution phase, and they aim to sell their positions to retail traders without causing a sharp price decline that might cut into their profits.
Retail Traders: Typically less informed and often influenced by emotions, retail traders tend to buy during the late stages of an uptrend, often entering the market during the BCLMX or even later. They are usually the ones holding the bag when the trend reverses because they buy into the market when smart money is selling.
Recognizing these volume patterns and understanding the interplay between smart money and retail traders can help in identifying the distribution phase's subphases and preparing for a potential trend reversal.
Trade active
We had a break out of the falling wedge and retest which may have been what is called a "shakeout" in the Wyckoff Method. I am looking for price to break back above the 50 ema (light blue) on the 1 hour to signify further upward movement. Here's some information about the shakeout period and what to look for.
Nature of the Shakeout:
The shakeout in the Wyckoff method is a period characterized by a sudden, sharp decline in prices. This move is typically designed to unsettle the market and is often a test to see if the asset can sustain higher prices. It happens after a period of upward movement or a false breakout (like the UT), and its purpose is to force the late buyers or weak hands to sell their positions.
Volume and Price Dynamics:
Volume Surge: The shakeout is usually accompanied by a surge in trading volume. This is a key indicator, as the high volume reflects the intensity of the selling pressure.
Rapid Price Movement: The price decline during a shakeout is often sharp and quick. It's a deliberate move to trigger stop-loss orders and create panic among retail traders.
Behavior of Retail Traders:
Retail traders, particularly those who bought in during the recent upward movement or false breakout, might be caught off guard. The rapid decline prompts fear, leading many to sell their holdings to cut losses.
This selling by retail traders further fuels the downward movement in price.
Role of Large Investors or Institutions:
Large investors or smart money might use this period to accumulate more shares at lower prices. They understand that the shakeout is a temporary phase and might capitalize on the panic selling by retail traders.
Alternatively, they could be the ones initiating the selling pressure to cleanse the market of weak holders before a potential move upwards.
Market Sentiment:
The shakeout can significantly affect market sentiment. It often creates uncertainty and fear, leading to a bearish outlook among many market participants.
Technical Analysis:
Price action analysis is crucial. Look for signs of stabilization or a reversal pattern to gauge if the shakeout is nearing its end.
Recovery Post-Shakeout:
Following a shakeout, there can be a period of consolidation as the market stabilizes. Watch for signs of accumulation or renewed buying interest, which could indicate the market is recovering from the shakeout.
Trade active
Looks like we have a bullish pennant playing out. Open interest has stabilized, rsi is bullish on 15 min and 1hr, hoping to get some good volume and a break out. Comment
My target has be hit and price had a good rejection. As you can see by the lime green candles this move up was pure manipulation. I am identifying a distribution pattern, a hypodermic needle on smaller time frames. Looking for a close below $2128 to confirm bearishness. Shorts and stop losses from this area have been liquidated and now long traders are trapped. Whales can also continue to push price higher. Comment
USDT.D, which has an inverse or negative correlation to BTC and ETH, looks like it could be in reaccumulation on the 1D chart. I can't really get a good read on its volume from the indicator but the structure looks very similar to reaccumulation. If this is true, BTC and ETH will have a BIG drop. I'm looking for it to complete the spring and hit the lowest support line. If there is a good bounce, bearishness may ensue. Just something to look out for.Trade active
I am loading up shorts from this area, with a tight stop-loss. $2750 was my target if price kept moving up, but I am seeing many coins giving me confirmation of bullish exhaustion. USDT.D touched the lower support level on my previous comment and looks like it wants to bounce. If this is the case, it's night night for crypto (for now).Comment
Looks like distribution on the 15 min. Looking to get a close with a bearish candle on higher time frames below the gray line. Comment
Gray Line Comment
ETH may be taking a dump soon. If it's fast, it may do something like this. More shorts are coming in at this area, and this would be perfect opportunity for a quick liquidity grab and move down. Comment
Short are closed out. I'm starting to see signs of possible move up again. I'm keeping an eye out for this.Comment
Looking for the Asian sessions to pump price, then press the button. $2444 and maybe some wicks to the upside. Comment
If $2444 breaks, $2700-2800 will be my next targetComment
Looks like ETH is re-accumulating right below $2444 which means price could breakthrough and move higher. Good buys at support, and big red candles look like manipulation to trap bears. Keep a eye out for a big move either way.
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