CRYPTO - RIOT - The Wyckoff Method
Updated
Wyckoff Method Application:
Hello everyone, DPT here. I love analysis, and I love to learn about and trade using theories and frameworks Dow Theory, Elliot Wave Theory, Action Reaction, and others, as I develop my own methodology... Today, I spotted a very good fit for the Wyckoff Method for a trade setup, and I wanted to share this with you. There are a few steps omitted, but I included the article which I used as reference so you can follow along, or use it as a template for your own trades. This is not financial advice, just an informational!
5 Step Approach to the Market:
1. Determine the present position and probable future trend of the market.
- Currently swinging bearish:
2. Select stocks in harmony with the trend.
- RIOT is known to follow BTCUSD, as it is a BTC miner!
3. Select stocks with a “cause” that equals or exceeds your minimum objective.
- I have high conviction that BTC is (a) on a downtrend with more downside, (b) RIOT has yet to price this in.
4. Determine the stocks' readiness to move.
- TA Oscillators and Moving Averages show that the stock is ready for a move to the downside.
5. Time your commitment with a turn in the stock market index.
- I have high conviction that the stock market index will also see downside in the nearest future:
Three Wyckoff Laws:
1. The law of supply and demand determines the price direction.
2. The law of cause and effect. (BTC and stock market downtrend, yet to fully be realized by RIOT).
3. The law of effort.
Analyses of Trading Ranges:
- Trading ranges (TRs) are places where the previous trend (up or down) has been halted and there is relative equilibrium between supply and demand. Institutions and other large professional interests prepare for their next bull (or bear) campaign as they accumulate (or distribute) shares within the TR.
Wyckoff Schematics:
- A successful Wyckoff analyst must be able to anticipate and correctly judge the direction and magnitude of the move out of a TR. Fortunately, Wyckoff offers time-tested guidelines for identifying and delineating the phases and events within a TR, which, in turn, provide the basis for estimating price targets in the subsequent trend.
Nine Buying/Selling Tests:
FYI - I won't be using a P&F chart.
1. Upside objective accomplished. ✔️
2. Activity bearish (volume decreases on rallies and increases on reactions). ✔️
3. Preliminary supply, buying climax. ✔️
4. Stock weaker than the market (that is, more responsive than the market on reactions and sluggish on rallies). Stock did not make new high, when BTC made a new ATH! ✔️
5. Upward stride broken (that is, support line or uptrend line penetrated). Currently in the beginning of a descending scallop (scythe) pattern, clearly breaking uptrend line. ✔️
6. Lower highs. ✔️
7. Lower lows. ✔️
8. Crown forming (lateral movement). ✔️
9. Estimated downside profit potential is at least three times the risk for if the initial stop-order were hit. ✔️
STRATEGY:
- Entry: 63
- SL: 87
- TP1: 47
- TP2: 38
- PT: 23
- RRR: 1.71
- Timeframe: 45d
- TRIGGER:
1. Confirmed rejection at this resistance.
2. BTC continued downtrend.
3. Increasing sell pressure.
“…all the fluctuations in the market and in all the various stocks should be studied as if they were the result of one man’s operations. Let us call him the Composite Man, who, in theory, sits behind the scenes and manipulates the stocks to your disadvantage if you do not understand the game as he plays it; and to your great profit if you do understand it.” (The Richard D. Wyckoff Course in Stock Market Science and Technique, section 9, p. 1-2)
As always, if you enjoy this post, please Like, Follow, Leave a message... GLHF!
- DPT
Hello everyone, DPT here. I love analysis, and I love to learn about and trade using theories and frameworks Dow Theory, Elliot Wave Theory, Action Reaction, and others, as I develop my own methodology... Today, I spotted a very good fit for the Wyckoff Method for a trade setup, and I wanted to share this with you. There are a few steps omitted, but I included the article which I used as reference so you can follow along, or use it as a template for your own trades. This is not financial advice, just an informational!
5 Step Approach to the Market:
1. Determine the present position and probable future trend of the market.
- Currently swinging bearish:
2. Select stocks in harmony with the trend.
- RIOT is known to follow BTCUSD, as it is a BTC miner!
3. Select stocks with a “cause” that equals or exceeds your minimum objective.
- I have high conviction that BTC is (a) on a downtrend with more downside, (b) RIOT has yet to price this in.
4. Determine the stocks' readiness to move.
- TA Oscillators and Moving Averages show that the stock is ready for a move to the downside.
5. Time your commitment with a turn in the stock market index.
- I have high conviction that the stock market index will also see downside in the nearest future:
Three Wyckoff Laws:
1. The law of supply and demand determines the price direction.
2. The law of cause and effect. (BTC and stock market downtrend, yet to fully be realized by RIOT).
3. The law of effort.
Analyses of Trading Ranges:
- Trading ranges (TRs) are places where the previous trend (up or down) has been halted and there is relative equilibrium between supply and demand. Institutions and other large professional interests prepare for their next bull (or bear) campaign as they accumulate (or distribute) shares within the TR.
Wyckoff Schematics:
- A successful Wyckoff analyst must be able to anticipate and correctly judge the direction and magnitude of the move out of a TR. Fortunately, Wyckoff offers time-tested guidelines for identifying and delineating the phases and events within a TR, which, in turn, provide the basis for estimating price targets in the subsequent trend.
Nine Buying/Selling Tests:
FYI - I won't be using a P&F chart.
1. Upside objective accomplished. ✔️
2. Activity bearish (volume decreases on rallies and increases on reactions). ✔️
3. Preliminary supply, buying climax. ✔️
4. Stock weaker than the market (that is, more responsive than the market on reactions and sluggish on rallies). Stock did not make new high, when BTC made a new ATH! ✔️
5. Upward stride broken (that is, support line or uptrend line penetrated). Currently in the beginning of a descending scallop (scythe) pattern, clearly breaking uptrend line. ✔️
6. Lower highs. ✔️
7. Lower lows. ✔️
8. Crown forming (lateral movement). ✔️
9. Estimated downside profit potential is at least three times the risk for if the initial stop-order were hit. ✔️
STRATEGY:
- Entry: 63
- SL: 87
- TP1: 47
- TP2: 38
- PT: 23
- RRR: 1.71
- Timeframe: 45d
- TRIGGER:
1. Confirmed rejection at this resistance.
2. BTC continued downtrend.
3. Increasing sell pressure.
“…all the fluctuations in the market and in all the various stocks should be studied as if they were the result of one man’s operations. Let us call him the Composite Man, who, in theory, sits behind the scenes and manipulates the stocks to your disadvantage if you do not understand the game as he plays it; and to your great profit if you do understand it.” (The Richard D. Wyckoff Course in Stock Market Science and Technique, section 9, p. 1-2)
As always, if you enjoy this post, please Like, Follow, Leave a message... GLHF!
- DPT
Note
Article for your reference:school.stockcharts.com/doku.php?id=market_analysis:the_wyckoff_method
Note
My BTC short swing:Current:
Note
This gives me full confidence in taking a short position in RIOT or other miners - as a time arbitrage - as they surely will need to price in this movement!Note
Should these trades be successful, I will probably be posting more informational posts like this in the future, and not be publicizing my macroeconomic analyses, as my modeling method is nearly actionable!Note
Here is a quick TSLA Short Analysis based on Market Psychology that I have not published:Note
TP1 has been achieved, and SP is currently at another potential entry point, as trend is being respected.Time is accelerated from the model forecast, but the levels remain.
Trade closed: target reached
Target hit within 1 Fib level standard deviation in time of error.
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